Page 160 - ISCDEBK-XI

Bill of Exchange 17.25

Unsolved Questions

1. On 15th March, 2021, X draws on Y two bills of exchange for ` 15,000 and ` 10,000 payable at 3 months. On
20th March, 2021, X endorses the first bill to his creditor A. On 1st April, 2021, A endorses the same bill to B.
The second bill is retained by X till maturity. On due date, those two bills are dishonoured, noting charges
for first and second bill being ` 300 and ` 200 respectively. Y then makes an offer to X to pay him ` 5,500
cash on account and to settle the balance plus interest @ 9% p.a. by agreeing to accept a bill of exchange
payable at 4 months. X accepts the arrangement. But this bill is also dishonoured due to insolvency of Y
and first and final dividend of 20% is received from Y’s estate.
Show Journal entries in the books of X and Y.
2. On 1st January, 2021, X received from Y three bills of exchange for ` 6,000, ` 8,000 and ` 10,000 for
6 months, 4 months and 3 months respectively. On 3rd January, the first bill was discounted by X with his
bank at a discount of 5% p.a. On 1st February, 2021, the 3rd bill was endorsed in favour of a creditor Z. The
second bill was retained till the due date. On due dates all the three bills were dishonoured.
Show necessary Journal entries in the books of X and Y.
3. B, being unable to meet his acceptance for ` 2,000 due on 15th June, approaches the drawer A (who is in
possession of the bill) on 30th June, with request to receive ` 800 in cash and draw a new bill on him for
the balance plus ` 15 for interest at 3 months’ date and cancel the old bill for ` 2,000. A agrees to this.
Pass entries in the books of A and B.
4. On 15th June, 2021, Mohan sold goods to Sohan valued at ` 20,000. He drew a 3 months bill for the amount
and discounted the same with his bank for ` 19,500. On due date, the bill was dishonoured and Mohan
paid the bank the amount due plus the noting charges of ` 500.
Draft Journal entries in the books of all the parties.
5. On 1st June, 2021, A sold goods to B for ` 25,000. B gave to A his acceptance payable 1 month after date.
Before maturity B requests A to renew it, which A does adding ` 1,000 to the new bill for interest.
Pass necessary Journal entries to record these transactions in the books of both A and B.
6. A sold goods to B on 1st September, 2021 for ` 16,000. B immediately accepted a 3 months bill for
the amount. On due date, B requested that the bill be renewed for a further period of 2 months.
A agreed provided interest at 9% p.a. was paid immediately in cash. To this B agreed. The second bill was
met on due date.
Give Journal entries in the books of A.
7. Amar sells goods to Bhola for ` 10,000. He draws upon Bhola a bill for the amount payable 3 months after
date. The bill is accepted by Bhola. Amar discounts the bill with his bank at a discount of ` 150 inclusive of
all charges. Bhola fails to meet this bill on maturity. Amar pays off his bank and his expenses amounting to
` 100. Bhola gives a fresh bill of 2 months’ date to Amar for ` 10,250, which he meets at maturity.
Show necessary Journal entries in Amar’s books.

GUIDE TO ANSWER

1. Interest on new bill—` 600; Bad Debts—` 16,480.