NCERT Solutions are said to be an extremely helpful study material while preparing for the CBSE Class 11 Accountancy examinations. This study material owns a deep knowledge and the Solutions collected by the subject matter wizards are no distinct.
NCERT Solution For Class 11 Commerce Accountancy Chapter 8 – Bill of Exchange furnishes us with an allinclusive data to all the concepts. As the students would have to learn the basic fundamentals about the subject of accountancy in Class 11, this curriculum for Class 11 is a comprehensive study material which explains the concepts in a great way.
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Short Answers for Class 11 Accountancy Chapter 8 – Bill of Exchange
1. Name any two types of commonly used negotiable instruments.
1. Promissory Notes
2. Cheques
2. Write two points of distinction between bills of exchange and promissory note.
Basis of Distinction  Bills of Exchange  Promissory Note 
Drawn by  Creditor  Debtor 
Parties Involved  Three parties are involved which are drawer, payee and drawee.  It involves two parties which are payee and drawer/maker. 
3. State any four essential features of bill of exchange.
The following four features are considered essential for a bill of exchange:
1. The bill of exchange must be in writing
2. A bill of exchange should contain an unconditional order to pay.
3. Drawer of the bill must sign the bill.
4. The amount and the expiry date should be mentioned specifically in the bill of exchange.
4. State the three parties involved in a bill of exchange.
A bill of exchange involves three parties and they are:
1. Drawer/Maker/Holder Responsible for issuing the bill
2. Payee/Holder The person who will receive the payment
3. Drawee/Acceptor One who has to accept the bill
5. What is meant by maturity of a bill of exchange?
The date where the bill is ready for payment is called as maturity of a bill. The date of maturity is arrived after adding 3 days of grace to the due date as per terms of the bill. The concept of due date will further help you in understanding maturity of a bill. It consists of following terms
1. Bill at Sight: This type of bill is due as and when it is presented.
2. Bill after Sight: In this type of bill the due date is calculated from the date the debtor accepts the bill plus the period as per terms of the bill. Maturity date is calculated by adding 3 days to the due date.
3. Bill after Date: In this type of bill, the due date is calculated from the date on which bill is drawn plus the period as per terms of bill. Maturity date is calculated adding 3 days to the due date.
Exceptions to maturity of bill: If the due date of the bill falls on a national holiday (like Independence Day) or on a Sunday, at that time the bill due date is counted one day prior to the original date and if the due date fall on a emergency holiday (like nationwide strike) at that time the bill due date is counted one day later.
6. What is meant by dishonour of a bill of exchange?
The situation where the drawee of the bill of exchange is unable to process the payment as per the maturity date of the bill, it is known as dishonour of bill of exchange. With this liability of the acceptor is reestablished and he/she becomes a debtor again. To reflect the changes, the receipt of bill of exchange should be reversed.
7. Name the parties to a promissory note
Two parties are involved in promissory note:
1. Maker/Drawer, Also known as promisor, is the one who is the maker of the note and is the one responsible to pay the sum as mentioned on promissory note.
2. Promisee or Payee is the one who will be receiving the payment.
8. What is meant by acceptance of a bill of exchange?
A bill of exchange drawn by a creditor upon debtor involves an unconditional order to pay in writing, but the same must be accepted by the debtor or someone on his/her behalf in order to make the debtor liable to pay. It is a draft before acceptance by debtor. So once the debtor has written the term “accepted” and signed the document, it is then known as bill of exchange and this process is called acceptance of bill of exchange.
9. What is Noting of a bill of exchange.
A bill of exchange is said to be dishonoured when the drawee is unable to make the payment upon presenting of the bill by drawer. To retain a legal evidence of the dishonoured bill, notary public needs to record it. The charges levied by notary public for recording the failed transaction is called noting charges and the process of recording is referred to as noting.
10. What is meant by renewal of a bill of exchange?
A bill of exchange is said to be renewed when the debtor/acceptor have insufficient funds to pay the drawer and hence requests for time extension in order to make payment. A new bill of exchange is drawn on being agreed by the drawer of the bill. This process is called renewal of bill of exchange. The bill gets renewal only if the drawee agrees to pay a certain rate of interest as decided for the period of extension.
11. Give the performa of a Bills Receivable Book.
Serial Number of Bill  Date Received  Date of Bill  Received From Whom 
Drawer  Acceptor  Where payable  Term  Due date  Ledger Folio  Amount  Cash Book Folio  Remarks 
12. Give the performa of a Bills Payable Book.
Serial Number of Bill  Date of Bill  Given To Whom 
Drawer  Payee  Payable Where 
Term of Bill 
Due Date  Ledger Folio  Amount Paid  Date  Cash Book Folio  Remarks 
13. What is retirement of a bill of exchange?
When a drawee of bill of exchange has adequate funds and requests the drawer to accept the payment before maturity date, and once the drawer accepts, it is known as retirement of the bill of exchange as the bill of exchange is closed before maturity.
14. Give the meaning of rebate.
The discount received by a drawee from the holder on advance payment of the bill of exchange to the holder (before due date or maturity date) is known as rebate.
15. Give the performa of a Bill of Exchange.
The following is a performa of bill of exchange
Mr. Y (Drawer)
₹ 10,000 
Bengaluru
July 10, 2019 

One month after date pay to me or my order, the sum of rupees ten thousand only, for value received  
Accepted (Signed) To Mr. W (Drawee) July 10, 2019 J.P Nagar, Bengaluru 560078 
(Signed)
Mr. Y Brigade Road, Bengaluru 560001 
Long Answers for Class 11 Accountancy Chapter 8 – Bill of Exchange
1. A bill of exchange must contain an unconditional promise to pay. Do you agree with a statement?
The Negotiable Instrument Act, 1881 defines bill of exchange as, “A bill of exchange is defined as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”
One of the most significant feature of a negotiable instrument is an unconditional order to pay. The drawee cannot add any conditions such as payment will be done only if debtors pay or business makes profit.
A bill of exchange must contain an unconditional order to pay for the following reasons:
1. To avoid any kind of conflict at the time of payment
2. To provide security to the creditor and also bound the debtor to pay the amount.
3. To comply with The Negotiable Instruments Act, 1881.
2. Briefly explain the effects of dishonour and noting of a bill of exchange.
When the drawee of the bill of exchange is unable to complete the payment on the date of maturity of the bill, it is known as dishonour of bill of exchange. With this liability of the acceptor is reestablished and he/she becomes a debtor again. To reflect the changes, the receipt of bill of exchange should be reversed.
The following entries will be made in books of holder/drawer (Nonpayment of noting charges):
Drawee A/c  Dr.  
To Bills Receivable A/c  
(Bill of exchange dishonoured) 
Entry in the books of drawee:
Bills Payable A/c  Dr.  
To Drawer  
(Bill of exchange dishonoured) 
Notary public charges a fee for keeping proof a dishonoured bill. These charges are beared by the drawee of the bill.
Following piece of information are noted by the notary public.
1. Amount and date of the bill
2. Possible Reason for dishonouring of bill
3. Fees charged for Noting
Entries of noting charges in the books of drawer (Payment done for noting charges):
Drawee  Dr.  
To Bills Receivable A/c  
To Cash A/c (Noting charges)  
(Bill of exchange dishonoured and Noting charges paid) 
In the books of drawee:
Bills Payable A/c  Dr.  
Noting charges A/c  Dr.  
To Drawer  
(Bill of exchange dishonoured and Noting charges due) 
3. Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
The following steps discusses the procedure of calculating bill of exchange maturity date:
1. Determine the due date of the bill as per terms of bills of exchange.
2. Grace period of three days must be added to the due date to arrive at maturity date.
For e.g., a bill having due date of 30 days (a month) is drawn on 1^{st} August then due date is 1^{st} September. Adding 3 grace period we arrive at bill maturity and payment due date which is on 4^{th} October.
Calculation of Days of grace period depends on these situations:
1. Known Holidays: If due date for payment falls on a national holiday or on a Sunday, then payment need to be processed the following day. The following examples will make it easier to understand.
 A bill that is drawn on 23^{rd} December with due date of 23^{rd} January, adding the grace period (3 days) the maturity date comes to 26^{th} January. However, as 26^{th} January is a national holiday; so, 25^{th} January becomes the due date for payment.
 A bill is drawn on 1^{st} June with maturity period of a month, the due date arrived is 1^{st} July. On adding 3 days of grace, the payment due date is 4^{th} July. However, if 4^{th} July is a Sunday, in this case payment needs to be completed on 3^{rd} July.
2. Unexpected holidays: If due date for payment falls on an holiday due to emergency, then the next day becomes the day on which payment needs to be done. For example, a bill drawn on 1^{st} May with a term of 20 days, then, adding grace period of 3 days, the payment due date becomes 24^{th} May. But, if a nationwide strike gets declared on 24^{th} May, then 25^{th} May is the new due date for the payment of the bill as per rules.
4. Distinguish between bill of exchange and promissory note.
The points of comparison are as follows:
Basis of Comparison  Bills of Exchange  Promissory Note 
What it contains  It contains an order to pay  It contains a promise to pay 
Parties  It involves three parties which are : drawer, payee and acceptor  It involves two parties and they are: maker/drawer and payee 
Drawn by  Creditor  Debtor 
Acceptance  Acceptance required by the debtor  Being drawn by promissor, it requires no acceptance 
Payee  The same person can be payee and drawer  Promissor and Payee cannot be same 
Noting in case of dishonour  Dishonouring of the instrument, leads to noting of the bill  No requirement of noting 
Liability  Liability does not rest with the drawer primarily  Promissor is primarily responsible 
5. Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
Retirement of bill of exchange happens when the holder of the bill of exchange receives a payment from acceptor before the accepted maturity date of the bill. In such cases the bill holder provides some discount to the acceptor and such a discount offered is called “rebate”.
The following are the benefits of retiring of a bill of exchange for debtor and creditor:
1. Improves the trust between two parties in transaction, namely, debtor and creditor.
2. Allows creditor to use the money for further business
3. Rebate provided by creditor becomes revenue for debtor
4. More business transactions can be conducted between two parties.
6. Explain briefly the purpose and advantages of maintaining of a Bills Receivable Book.
In day to day operations, a business receives many bills. Maintaining a journal for all such bills is a cumbersome task. In this case, a specialized book is created which keeps record of all such bills that are received from the debtors. This book contains all the necessary information such as bill date, due date, amount, debtors name and it is summed up on a periodical basis and the balance thus obtained is transferred to debit side of the bills receivable account.
Maintaining a bills receivable book has following benefits:
1. All information pertaining to the bills receivable, such as due date, amount, etc., get recorded in one place, thereby makes it easy to access the records.
2. Likelihood of fraud is greatly minimized as bills are recorded in one place.
3. Higher level of liability and obligation exists on the person maintaining the accounts. If any error is spotted, it can be rectified easily.
4. Time of the accountant is saved as recording of transactions are recurring and similar in nature.
5. As it is a particular book only dealing with bills receivable, it is easy to locate all details pertaining to a specific bill of exchange.
7. Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
Maintaining bills payable book has following benefits:
1. Quick, efficient and accurate recording of business transactions.
2. Minimizes the chances of fraud as all the bills are recorded at one place
3. A high degree of accountability and answerability on part of the accountant is observed as all the transactions get verified by the same person which leads to easy detection and rectification of errors.
4. As information is documented by an individual, it improves the division of labour and efficiency of organization.
Procedure of posting to ledger:
The recordings from the Bills Payable Book are posted to the accounts of the creditors who received acceptance from the debtors. These books are then totaled periodically and credited to the Bills Payable Account in the ledger.
Numerical Answers for Class 11 Accountancy Chapter 8 – Bill of Exchange
1. On Jan 01, 2016 Rao sold goods ₹ 10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books Rao and prepare of Rao’s account in the books of Reddy.
The transactions are journalized below:
Books of Rao  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
01 Jan  Reddy  Dr.  10,000  
To Sales A/c  10,000  
(Goods tradedto Reddy)  
01 Jan  Cash A/c  Dr.  5,000  
To Reddy  5,000  
(Cash received from Reddy)  
01 Jan  Bills Receivable A/c  Dr.  5,000  
To Reddy  5,000  
(Bill received for 30 days accepted by Reddy)  
03 Feb  Cash A/c  Dr.  5,000  
To Bills Receivable A/c  5,000  
(Reddy’s acceptance met on due date)  
Books of Reddy  
Rao’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 
01 Jan  Cash  5,000  2016  
01 Jan  Bills Receivable  5,000  01 Jan  Purchases  10,000  
10,000  10,000  
2. On Jan 01, 2016, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.
The necessary journal entries are as follows:
Books of Parvati  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
01 Jan  Shankar  Dr.  8,000  
To Sales A/c  8,000  
(Sold goods to Shankar)  
01 Jan  Bills Receivable A/c  Dr.  8,000  
To Shankar  8,000  
(Shankar sent Promissory Note for
three months) 

05 Apr  Cash A/c  Dr.  8,000  
To Bills Receivable A/c  8,000  
(Cash received for Promissory Note one day after the
Maturity date on account of holiday declared by Govt.) 

Books of Shankar  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
01 Jan  Purchases A/c  Dr.  8,000  
To Parvati  8,000  
(Goods purchased from Parvati)  
01 Jan  Parvati  Dr.  8,000  
To Bills Payable A/c  8,000  
(Promissory note for three months sent to Parvati)  
05 Apr  Bills Payable A/c  Dr.  8,000  
To Cash A/c  8,000  
(Cash paid on maturity of promissory note)  
3. Vishal sold goods for ₹ 7,000 to Manju on Jan 05, 2016 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal’s draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his [email protected]% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.
The transactions are journalized as follows:
Books of Vishal  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
05 Jan  Manju  Dr.  7,000  
To Sales A/c  7,000  
(Good Manju)  
05 Jan  Bills Receivable A/c  Dr.  7,000  
To Manju  7,000  
(Manju’s acceptance received for two months)  
05 Jan  Bank A/c  Dr.  6,860  
Discount A/c  Dr.  140  7,000  
To Bills Receivable A/c  
(Bill Receivable discounted with the bank @ 12 % p.a. for two months)  
Books of Manju  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
05 Jan  Purchases A/c  Dr.  7,000  
To Vishal  7,000  
(purchasing from Vishal)  
05 Jan  Vishal  Dr.  7,000  
To Bills Payable A/c  7,000  
(Bill drawn by Vishal acknowledged)  
08 Mar  Bills Payable A/c  Dr.  7,000  
To Bank A/c  7,000  
(Bill Payable Amount paid to bank on maturity)  
4. On 01 Feb, 2016, John purchased goods for ₹ 15,000 from Jimmi. He immediately made a payment of ₹ 5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmi. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmi sent the same to his bank for collection. The bank duly presented the bill to John on the due date who met the bill. The bank informed the same to Jimmi. Prepare John’s account in the books of Jimmi and Jimmi account in the books of John.
The entries are shown below:
Books of Jimmi  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
01 Feb  John  Dr.  15,000  
To Sales A/c  15,000  
(Goods traded to John)  
01 Feb  Bank A/c  Dr.  5,000  
To John  5,000  
(Cheque acknowledged for ₹ 5,000 from John)  
01 Feb  Bills Receivable A/c  Dr.  10,000  
To John  10,000  
(Bill received from John for 40 days)  
10 Mar  Bill Sent for Collection A/c  Dr.  10,000  
To Bills Receivable A/c  10,000  
(John’s approval sent to bank for collection)  
15 Mar  Bank A/c  Dr.  10,000  
To Bill Sent for Collection A/c  10,000  
(John’s approval met on due date and bank
got the payment) 

Ledger
John’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2016  2016  
01 Feb  Sales  15,000  01 Feb  Bank  5,000  
01 Feb  Bills Receivable  10,000  
15,000  15,000  
Books of John  
Journal  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
01 Feb  Purchases A/c  Dr.  15,000  
To Jimmi  15,000  
(Goods purchased from Jimmi)  
01 Feb  Jimmi  Dr.  5,000  
To Bank A/c  5,000  
(Cheque payment done to Jimmi)  
01 Feb  Jimmi  Dr.  10,000  
To Bills Payable A/c  10,000  
(Bill drawn by Jimmi acknowledged for 40 days)  
15 Mar  Bills Payable A/c  Dr.  10,000  
To Bank A/c  10,000  
(Payment of bill done on maturity to bank)  
Ledger
Jimmi’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2016  2016  
01 Feb  Bank  5,000  01 Feb  Purchases  15,000  
01 Feb  Bills Payable  10,000  
15,000  15,000  
5. On Jan 15, 2015, Kartar Sold goods for ₹ 30,000 to Bhagwan and drew upon him three bills of exchanges of ₹ 10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his creditor Ratna and the third bill was discounted by him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.
The solution is as follows:
Journal Entries in the Books of Kartar  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2015  
15 Jan  Bhagwan  Dr.  30,000  
To Sales A/c  30,000  
( Goods traded to Bhagwan)  
15 Jan  Bills Receivable A/c  Dr.  10,000  
To Bhagwan A/C  10,000  
(Three bills of ₹ 10,000 each, received from
Bhagwan) 

15 Jan  Ratna  Dr.  10,000  
To Bills Receivable A/c  10,000  
(₹ 10,000 bill from Bhagwan endorsed to Ratna)  
15 Jan  Bank A/c  Dr.  9,850  
Discount A/c  Dr.  150  
To Bills Receivable A/c  10,000  
(B/R discounted)  
19 Feb  Cash A/c  Dr.  10,000  
To Bills Receivable A/c  10,000  
(First bill for one month paid by Bhagwan, on due date)  
Bhagwan’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
15 Jan  Sales A/c  30,000  15 Jan  Bills Receivable A/c  30,000  
30,000  30,000  
Ratna’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
15 Jan  Bills Receivable A/c  10,000  15 Jan  Balance b/d  10,000  
10,000  10,000  
Bills Receivable Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
15 Jan  Bhagwan  30,000  15 Jan  Ratna  10,000  
15 Jan  Bank A/c  9,850  
15 Jan  Discount A/c  150  
19 Feb  Cash  10,000  
30,000  30,000  
Cash Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
19 Feb  Bills Receivable  10,000  19 Feb  Balance c/d  10,000  
10,000  10,000  
Bank’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
15 Jan  Bills Receivable  9,850  15 Jan  Balance c/d  9,850  
9,850  9,850  
Journal Entries in the Books of Bhagwan  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2015  
15 Jan  Purchases A/c  Dr.  30,000  
To Kartar  30,000  
(Good bought from Kartar on credit)  
15 Jan  Kartar  Dr.  30,000  
To Bills Payable A/c  30,000  
(Three bill ₹ 10,000 each drawn by Kartar–
Accepted and returned them to Kartar) 

19 Feb  Bills Payable A/c  Dr.  10,000  
To Cash A/c  10,000  
(First bill payment completed on due date)  
19 Mar  Bills Payable A/c  Dr.  10,000  
To Bank A/c  10,000  
(Second bill payment completed on due date to Ratna)  
19 Apr  Bills Payable A/c  Dr.  10,000  
To Bank A/c  10,000  
(Third bill payment completed on due date to bank)  
Kartar’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
15 Jan  Bills Payable A/c  30,000  15 Jan  Purchases  30,000  
30,000  30,000  
Bills Payable Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
19 Feb  Cash A/c  10,000  15 Jan  Kartar  30,000  
19 Mar  Bank A/c  10,000  
19 Apr  Bank A/c  10,000  
30,000  30,000  
Cash Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
19 Feb  Balance b/d  10,000  19 Feb  Bills Payable A/c  10,000  
10,000  10,000  
Bank’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
(₹) 
Date  Particulars  J.F.  Amount
(₹) 

2015  2015  
15 Mar  Balance b/d  20,000  19 Mar  Bills Payable A/c  10,000  
19 Apr  Bills Payable A/c  10,000  
20,000  20,000  
6. On Jan. 01, 2016 Arun sold goods for ₹ 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and journalise the above transactions in the books of Arun and Sunil.
The transactions are journalized as follows:
Journal Entries in the Books of Arun  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
01 Jan  Sunil  Dr.  30,000  
To Sales A/c  30,000  
(Goods traded to Sunil)  
01 Jan  Cash A/c  Dr.  14,700  
Discount Allowed A/c  Dr.  300  
To Sunil  15,000  
(50% due from Sunil received and
2% Cash Discount allowed to Sunil) 

01 Jan  Bills Receivable A/c  Dr.  15,000  
To Sunil  15,000  
(Promissory note established for 20 days from Sunil)  
23 Jan  Cash A/c  Dr.  15,000  
To Bills Receivable A/c  15,000  
(Cash received from Sunil before
Maturity) 

Journal Entries in the Book of Sunil  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Jan  Purchases A/c  Dr.  30,000  
To Arun  30,000  
(Goods purchased from Arun)  
01 Jan  Arun  Dr.  15,000  
To Cash A/c  14,700  
To Discount Received A/c  300  
(50% amount due to Arun paid by cheque and 2% discount allowed by Arun)  
01 Jan  Arun  Dr.  15,000  
To Bills Payable A/c  15,000  
(Promissory note issued in favour of Arun for twenty days)  
23 Jan  Bills Payable A/c  Dr.  15,000  
To Cash A/c  15,000  
(Promissory note fullfilled one day before the maturity day)  
7. Darshan sold goods for ₹ 40,000 to Varun on 8.1.2016 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.
· When the bill was retained by Darshan till the date of its maturity.
· When Darshan immediately discounted the bill @ 6% p.a. with his bank.
· When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.
· When three days before its maturity, the bill was sent by Darshan to his bank for collection.
The entries are shown below:
(i)
Books of Darshan  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
08 Jan  Varun  Dr.  40,000  
To Sales A/c  40,000  
(Goods traded to Varun)  
08 Jan  Bills Receivable A/c  Dr.  40,000  
To Varun  40,000  
(Bill of Exchange duly accepted and returned by Varun)  
11 Mar  Cash A/c  Dr.  40,000  
To Bills Receivable A/c  40,000  
(Payment for B/R received for B/R)  
Books of Varun  
Date  Particulars  L.F  Debit ₹  Credit₹  
2016  
08 Jan  Purchases A/c  Dr.  40,000  
To Darshan  40,000  
(Goods purchased from Darshan)  
08 Jan  Darshan  Dr.  40,000  
To Bills Payable A/c  40,000  
(Bill of two months accepted for Darshan)  
11 Mar  Bills Payable A/c  Dr.  40,000  
To Cash A/c  40,000  
(Varun cleared his payment on the due date)  
(ii)
Books of Darshan  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
08 Jan  Varun  Dr.  40,000  
To Sales A/c  40,000  
(Goods traded to Varun)  
08 Jan  Bills Receivable A/c  Dr.  40,000  
To Varun  40,000  
(B/R received from Varun for two months)  
08 Jan  Bank A/c  Dr.  39,600  
Discount A/c  Dr.  400  
To Bills Receivable A/c  40,000  
(B/R discounted from bank @ 6 p.a.)  
Books of Varun  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
08 Jan  Purchases A/c  Dr.  40,000  
To Darshan  40,000  
(Goods purchased from Darshan)  
08 Jan  Darshan  Dr.  40,000  
To Bills Payable A/c  40,000  
(Bill of two months accepted for Darshan)  
11 Mar  Bills Payable A/c  Dr.  40,000  
To Bank A/c  40,000  
(Varun cleared his payment on the
due date) 

(iii)
Books of Darshan  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
08 Jan  Varun  Dr.  40,000  
To Sales A/c  40,000  
(Goods traded to Varun)  
08 Jan  Bills Receivable A/c  Dr.  40,000  
To Varun A/c  40,000  
(Varun’s approval received for two months)  
08 Jan  Suresh A/c  Dr.  40,000  
To Bills Receivable A/c  40,000  
(Varun’s approval endorsed in favour of Suresh)  
Books of Varun  
Date  Particulars  L.F  Debit ₹  Credit₹  
2016  
08 Jan  Purchases A/c  Dr.  40,000  
To Darshan  40,000  
(Goods purchased from Darshan)  
08 Jan  Darshan  Dr.  40,000  
To Bills Payable A/c  40,000  
(Bill drawn by Darshan accepted for two months)  
11 Mar  Bills Payable A/c  Dr.  40,000  
To Cash A/c  40,000  
(Bill paid to the holder of bill)  
(iv)
Books of Darshan  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
08 Jan  Varun A/c  Dr.  40,000  
To Sales A/c  40,000  
(Goods traded to Varun)  
08 Jan  Bills Receivable A/c  Dr.  40,000  
To Varun A/c  40,000  
(Bill of Exchange duly accepted and returned by Varun)  
08 Mar  Bill Sent for Collection A/c  Dr.  40,000  
To Bills Receivable A/c  40,000  
(Bill of Exchange sent for collection to bank)  
11 Mar  Bank A/c  Dr.  40,000  
To Bill Sent for Collection A/c  40,000  
(Bill of Exchange matured and duly collected on date of maturity)  
Books of Varun  
Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
08 Jan  Purchases A/c  Dr.  40,000  
To Darshan  40,000  
(Goods purchased from Darshan)  
08 Jan  Darshan  Dr.  40,000  
To Bills Payable A/c  40,000  
(Bill of Exchange duly accepted and returned to Darshan)  
11 Mar  Bills Payable A/c  Dr.  40,000  
To Bank A/c  40,000  
(Bill of Exchange matured and duly cleared on date of maturity)  
8. Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.
Date Amount
₹
21 Dec, 2016 1,000
26 Dec, 2016 1,200
Dec.18, 2016 2,000
31 Dec, 2016 5,000
For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.
The necessary journal entries are as follows:
Journal Entries in the Books of Bansal Traders  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
21 Dec  Mohan Traders  Dr.  900  
To Sales A/c  900  
(Goods traded to Mohan Traders list price ₹
1,000 at 10% trade discount) 

2016  
21 Dec  Bills Receivable A/c  Dr.  900  
To Mohan Traders  900  
(Promissory note established from Mohan Traders
payable after 30 days) 

2016  
26 Dec  Mohan Traders  Dr.  1,080  
To Sales A/c  1,080  
(Goods traded to Mohan Traders list price ₹
1,200 at 10% trade discount) 

2016  
26 Dec  Bills Receivable A/c  Dr.  1,080  
To Mohan Traders  1,080  
(Promissory note received from Mohan Traders)  
2016  
26 Dec  Bank A/c  Dr.  1,071  
Discount A/c  Dr.  9  
To Bills Receivable A/c  1,080  
(Promissory note discounted from the Bank)  
2016  
28 Dec  Mohan Traders A/c  Dr.  1,800  
To Sales A/c  1,800  
(Goods traded to Mohan Traders list price ₹
2,000 at 10% trade discount) 

2016  
28 Dec  Bills Receivable A/c  Dr.  1,800  
To Mohan Traders A/c  1,800  
(Promissory note established from Mohan Traders)  
2016  
28 Dec  Dream Soaps A/c  Dr.  1,900  
To Bills Receivable A/c  1,800  
To Discount Received A/c  100  
(Promissory note of ₹ 1,800 sent to Dream
Soap in full settlement of amount due to him) 

2016  
31 Dec  Mohan Traders  Dr.  4,500  
To Sales A/c  4,500  
(Goods traded to Mohan trades list price ₹
5,000 at 10% trade discount) 

2016  
31 Dec  Bills Receivable A/c  Dr.  4,500  
To Mohan Traders  4,500  
(Promissory note established from Mohan Traders for 30 days)  
2017  
23 Jan  Cash A/c  Dr.  900  
To Bills Receivable A/c  900  
(Promissory note issued on Dec. 21,
2005 was met on maturity) 

2017  
25 Jan  Bill Sent for collection A/c  Dr.  4,500  
To Bills Receivable A/c  4,500  
(Promissory note issued on Dec. 31, 2005
sent for collection to bank) 

2017  
02 Feb  Bank A/c  Dr.  4,500  
To Bill Sent for Collection A/c  4,500  
(Bank got payment of bill sent for collection
on due date) 

In the books of Bansal Traders
Mohan Trader’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 

2016  2016  
21 Dec  Sales  900  21 Dec  Bills Receivable  900  
26 Dec  Sales  1,080  26 Dec  Bills Receivable  1,080  
28 Dec  Sales  1,800  28 Dec  Bills Receivable  1,800  
31 Dec  Sales  4,500  31 Dec  Bills Receivable  4,500  
8,280  8,280  
Journal Entries in the Books of Mohan Trader’s  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
21 Dec  Purchases A/c  Dr.  900  
To Bansal Traders  900  
(Goods purchased from Bansal Trader’s list price ₹
1,000 at 10% trade discount) 

2016  
21 Dec  Bansal Trader  Dr.  900  
To Bills Payable A/c  900  
(Promissory note issued Bansal Traders for ₹ 900)  
2016  
26 Dec  Purchases A/c  Dr.  1,080  
To Bansal Traders  1,080  
(Goods purchased from Bansal Traders list price ₹
1,200 at 10% Trade discount) 

2016  
26 Dec  Bansal Traders  Dr.  1,080  
To Bills Payable A/c  1,080  
(Promissory note established from Bansal Traders)  
2016  
28 Dec  Purchases A/c  Dr.  1,800  
To Bansal Traders  1,800  
(Goods purchased from Bansal Traders list price ₹
2,000 at 10% trade discount) 

2016  
28 Dec  Bansal Traders  Dr.  1,800  
To Bills Payable A/c  1,800  
(Promissory note issued to Bansal Traders)  
2016  
31 Dec  Purchases A/c  Dr.  4,500  
To Bansal Traders  4,500  
(Goods purchased from Bansal Traders of list price ₹
5,000 at 10% trade discount) 

2016  
31 Dec  Bansal Traders  Dr.  4,500  
To Bills Payable A/c  4,500  
(Promissory note issued to Bansal Traders)  
2017  
23 Jan  Bills Payable A/c  Dr.  900  
To Cash A/c  900  
(The first promissory note discharged on its due date)  
2017  
28 Jan  Bills Payable A/c  Dr.  1,080  
To Bank A/c  1,080  
(The second promissory note discharged on its due
date) 

2017  
30 Jan  Bills Payable A/c  Dr.  1,800  
To Cash A/c  1,800  
(The third promissory discharged by paying ₹
1,800 to Dream Soaps) 

2017  
02 Feb  Bills Payable A/c  Dr.  4,500  
To Bank A/c  4,500  
(The fourth promissory note discharged by paid ₹ 4,500 to Bank)  
In the books of Mohan Traders
Bansal Trader’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2016  2016  
21 Dec  Bills Payable  900  21 Dec  Purchases  900  
26 Dec  Bills Payable  1,080  26 Dec  Purchases  1,080  
28 Dec  Bills Payable  1,800  28 Dec  Purchases  1,800  
31 Dec  Bills Payable  4,500  31 Dec  Purchases  4,500  
8,280  8,280  
9. Narayanan purchased goods for ₹ 25,000 from Ravindran on Feb. 01, 2016. Ravindran drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravindran and Narayanan in following cases:
 When the bill was retained by Ravindran with him till the date of its maturity.
 When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.
 When the bill was endorsed to his creditor Ganeshan.
 When the bill was sent by Ravindran to his bank for collection a few days before it maturity.
Necessary journal entries are as follows:
(i) : When the bill was retained by Ravindran with him till the date of its maturity
Books of Ravindran  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Narayanan  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Narayanan)  
01 Feb  Bills Receivable A/c  Dr.  25,000  
To Narayanan  25,000  
(Narayanan’s acceptance received for 30 days)  
05 Mar  Narayanan  Dr.  25,000  
To Bills Receivable A/c  25,000  
(Narayanan failed to meet his
acceptance and bill dishonoured) 

Books of Narayanan  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Purchases A/c  Dr.  25,000  
To Ravindran  25,000  
(Goods purchased from Ravindran)  
01 Feb  Ravindran  Dr.  25,000  
To Bills Payable A/c  25,000  
(Ravindran’s bill accepted)  
05 Mar  Bills Payable A/c  Dr.  25,000  
To Ravindran A/c  25,000  
(Bill dishonoured on maturity)  
(ii) : When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.
Books of Ravindran  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Narayanan  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Narayanan)  
01 Feb  Bills Receivable A/c  Dr.  25,000  
To Narayanan  25,000  
(Narayanan’s acceptance received)  
01 Feb  Bank A/c  Dr.  24,875  
Discount A/c  Dr.  125  
To Bills Receivable A/c  25,000  
(Narayanan’s acceptance got discounted with
bank @ 6% p.a.) 

05 Mar  Narayanan  25,000  
To Bank A/c  25,000  
(Narayanan’s acceptance dishonoured)  
Books of Narayanan  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Purchases A/c  Dr.  25,000  
To Ravindran  25,000  
(Goods purchased from Raivnderan)  
01 Feb  Ravindran  Dr.  25,000  
To Bills Payable A/c  25,000  
(Ravindran’s bill accepted)  
05 Mar  Bills Payable A/c  Dr.  25,000  
To Ravindran  25,000  
(Bill dishonoured on maturity)  
(iii) : When the bill was endorsed to his creditor Ganeshan
Books of Ravindran  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Narayanan  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Narayanan)  
01 Feb  Bills Receivable A/c  Dr.  25,000  
To Narayanan  25,000  
(Narayanan’s acceptance received)  
01 Feb  Ganeshan  Dr.  25,000  
To Bills Receivable A/c  25,000  
(Narayanan’s acceptance endorsed in favour
of Ganeshan) 

05 Mar  Narayanan  Dr.  
To Ganeshan A/c  25,000  
(Narayanan’s acceptance dishonoured)  
Books of Narayanan  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Purchases A/c  Dr.  25,000  
To Ravindran  25,000  
(Goods purchased from Ravindran)  
01 Feb  Ravindran  Dr.  25,000  
To Bills Payable A/c  25,000  
(Ravindran’s bill accepted)  
05 Mar  Bills Payable A/c  Dr.  25,000  
To Ravindran  25,000  
(Ravindran’s bill dishonoured on due date)  
(iv): When the bill was sent by Ravindran to his bank for collection a few days before it maturity
Books of Ravindran  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Narayanan  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Narayanan)  
01 Feb  Bills Receivable A/c  Dr.  25,000  
To Narayanan  25,000  
(Narayanan’s acceptance received)  
01 Feb  Bill Sent for Collection A/c  Dr.  25,000  
To Bills Receivable A/c  25,000  
(Bill sent to bank for collection)  
05 Mar  Narayanan  Dr.  25,000  
To Bill Sent for Collection A/c  25,000  
(Bill got dishonoured)  
Books of Narayanan  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Feb  Purchases A/c  Dr.  25,000  
To Ravindran  25,000  
(Bought goods from Ravindran)  
01 Feb  Ravindran  Dr.  25,000  
To Bills Payable A/c  25,000  
(Ravindran’s bill accepted)  
05 Mar  Bills Payable A/c  Dr.  25,000  
To Ravindran  25,000  
(Ravindran’s bill dishonoured)  
10. Ravi sold goods for ₹ 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for ₹ 5,000 payable after one month. The second bill was for ₹ 10,000 payable after 40 days; the third bill was for ₹ 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of ₹ 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.
The necessary journal entries are shown below:
Books of Ravi  
Journal  
Date  Particulars  L.F.  Debit
₹ 
Credit₹  
2016  
13 Feb  Sudershan  Dr.  40,000  
To Sales A/c  40,000  
(Goods tradedto Sudershan)  
13 Feb  Bills Receivable A/c  Dr.  40,000  
To Sudershan  40,000  
(Four bills from Sudershan received: the first for ₹
5,000, the second bill for ₹ 10,000, the third bill for ₹ 12,000 and the fourth bill for ₹ 13) 

13 Feb  Bank A/c  Dr.  4,975  
Discount A/c  Dr.  25  
To Bills Receivable A/c  5,000  
(The first bill discounted with bank at 6% p.a.)  
13 Feb  Mustaq  Dr.  10,200  
To Bills Receivable A/c  10,000  
To Discount Received A/c  200  
(The second bill endorsed to Mustaq in full settlement
of amount due to him) 

03 Mar  Bill Sent for Collection A/c  Dr.  13,000  
To Bills Receivable A/c  13,000  
(The fourth bill sent to bank for collection)  
07 Mar  Sudershan  Dr.  13,000  
To Bill Sent for Collection A/c  13,000  
(The fourth bill dishonoured on due date)  
07 Mar  Sudershan  Dr.  81  
To Interest A/c  81  
(Interest due on the fourth bill ₹ 13,000 for 19
days at 12% p.a,) 

10 Mar  Cash A/c  Dr.  13,081  
To Sudershan  13,081  
(Cash received from Sudershan)  
16 Mar  Sudershan  Dr.  5,000  
To Bank A/c  5,000  
(The first bill dishonoured)  
16 Mar  Sudershan  Dr.  50  
To Interest A/c  50  
(Interest due on amount ₹ 5,000 at 12%
for one month) 

19 Mar  Cash A/c  Dr.  5,050  
To Sudershan A/c  5,050  
(Sudershan paid the amount due on account
dishonoured of the first bill plus interest) 

28 Mar  Sudershan  Dr.  10,000  
Discount Received A/c  Dr.  200  
To Mustaq  10,200  
(The second bill dishonoured, which had endorsed
in favour of Mustaq) 

28 Mar  Sudershan  Dr.  132  
To Interest A/c  132  
(Interest charged at 12% on the amount due on account
of dishonour of the second bill ₹ 10,000) 

01 Apr  Cash A/c  Dr.  10,132  
To Sudershan A/c  10,132  
(Received cash from Sudershan for the second bill
along with interest) 

May16  Sudershan  Dr.  12,000  
To Bills Receivable A/c  12,000  
(The third bill dishonoured on due date)  
May16  Sudershan  Dr.  360  
To Interest A/c  360  
(Interest at 12% for 3 months charged on the amount due
on account of dishonour the third bill ₹ 12,000) 

May19  Cash A/c  Dr.  12,360  
To Sudershan  12,360  
(Cash received from Sudershan for the third bill along with interest 12% p.a.)  
Ledger
Sudershan’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2016  2016  
13 Feb  Sales  40,000  13 Feb  Bills Receivable  40,000  
07 Mar  Bill sent for Collection  13,000  10 Mar  Cash  13,081  
07 Mar  Interest  81  19 Mar  Cash  5,050  
16 Mar  Bank  5,000  01 Apr  Cash  10,132  
16 Mar  Interest  50  May19  Cash  12,360  
28 Mar  Mustaq  10,000  
28 Mar  Interest  132  
16 May  Bills Receivable  12,000  
16 May  Interest  360  
80,623  80,623  
Mustaq’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 
2016  2016  
13 Feb  B/R  10,000  28 Mar  Sudershan  10,000  
13 Feb  Discount Received  200  28 Mar  Discount Received  200  
10,200  10,200  
Books of Sudershan  
Journal  
Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
13 Feb  Purchases A/c  Dr.  40,000  
To Ravi  40,000  
(Goods purchased from Ravi)  
13 Feb  Ravi  Dr.  40,000  
To Bills Payable A/c  40,000  
(Four bills drawn by Ravi accepted: the first bill for
₹ 5,000 payable after one month, the second for ₹ 10,000 payable after 40 days, the third for ₹ 12,000 payable after 3 months and the fourth for ₹ 13,000 payable after 19 days) 

07 Mar  Bills Payable A/c  Dr.  13,000  
To Ravi  13,000  
(The fourth bill dishonoured)  
07 Mar  Interest A/c  Dr.  81  
To Ravi  81  
(Interest charged for the amount of fourth bill
at 12% p.a.) 

10 Mar  Ravi  Dr.  13,081  
To Cash A/c  13,081  
(Cash paid to Ravi for amount due on account of
dishonour of the fourth bill along with interest at 12% p.a. for 19 days) 

16 Mar  Bills Payable A/c  Dr.  5,000  
To Ravi  5,000  
(The first bill dishonoured)  
16 Mar  Interest A/c  Dr.  50  
To Ravi  50  
(Interest charged at 12% p.a. on the first bill for one month)  
19 Mar  Ravi  Dr.  5,050  
To Cash A/c  5,050  
(Cash paid to Ravi for amount due on account of
dishonour of the first bill along with interest at 12% p.a. for one month) 

28 Mar  Bills Payable A/c  Dr.  10,000  
To Ravi  10,000  
(The second bill dishonoured)  
28 Mar  Interest A/c  Dr.  132  
To Ravi  132  
(Interest charged at 12% p.a. for 40 days on the second bill)  
01 Apr  Ravi  Dr.  10,132  
To Cash A/c  10,132  
(Cash paid to Ravi for amount due on account of
dishonour of the second bill along with interest at 12% p.a. for 40 days) 

16 May  Bills Payable A/c  Dr.  12,000  
To Ravi  12,000  
(The third bill dishonoured)  
16 Mar  Interest A/c  Dr.  360  
To Ravi  360  
(Interest charged at 12% p.a. for 3 months on third bill)  
19 May  Ravi  Dr.  12,360  
To Cash A/c  12,360  
(Cash paid to Ravi for amount due on account of
dishonour of the third bill along with interest at 12% p.a. for 3 months) 

11. On Jan 01, 2016 Neha sold goods for ₹ 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.
The necessary journal entries are shown below:
Books of Neha
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Jan  Muskan  Dr.  20,000  
To Sales A/c  20,000  
(Goods tradedto Muskan)  
01 Jan  Bills Receivable A/c  Dr.  20,000  
To Muskan  20,000  
(Muskan’s acceptance received)  
04 Feb  Cash A/c  Dr.  19,800  
Rebate on bill A/c  Dr.  200  
To Bills Receivable A/c  20,000  
(Muskan’s acceptance retired one month before
maturity and allowed rebate at 12% p.a.) 

Books of Muskan
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
01 Jan  Purchases A/c  Dr.  20,000  
To Neha  20,000  
(Goods purchased from Neha)  
01 Jan  Neha  Dr.  20,000  
To Bills Payable A/c  20,000  
(Bill drawn by Neha payable after 2 months
accepted) 

04 Feb  Bills Payable A/c  Dr.  20,000  
To Cash A/c  19,800  
To Rebate on Bills A/c  200  
(Bill paid one month before maturity and received
Rebate at 12% p.a.) 

12. On Jan 15, 2016 Raghu sold goods worth ₹ 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for ₹ 5,000 payable after one month, the second bill was for ₹ 20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his creditor Dewan in full settlement of a debt of ₹ 5,200. The second bill was discounted by Raghu @ 6 % p.a. and the third bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid ₹ 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonoured by Devendra and the bank paid ₹ 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest ₹ 1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra’s account in Raghu’s books and Raghu’s account in Devendra’s account.
The journal entries are as follows:
Books of Raghu
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Devendra  Dr.  35,000  
To Sales A/c  35,000  
(Goods tradedto Devendra)  
15 Jan  Bills Receivable A/c  Dr.  35,000  
To Devendra  35,000  
(Three bills received from Devendra–the first bill ₹ 5,000,
the second bill ₹ 20,000, the third bill ₹ 10,000) 

15 Jan  Dewan  Dr.  5,200  
To Bills Receivable A/c  5,000  
To Discount Received A/c  200  
(The first bill endorsed to Dewan in full settlement
of amount due to him) 

15 Jan  Bank A/c  Dr.  19,700  
Discount A/c  Dr.  300  
To Bills Receivable A/c  20,000  
(The second bill discounted with bank at 6% p.a.)  
18 Apr  Devendra  Dr.  20,030  
To Bank A/c  20,030  
(The second bill dishonoured and bank paid
₹ 30 for noting charges) 

14 May  Bill Sent for Collection A/c  Dr.  10,000  
To Bills Receivable A/c  10,000  
(The third bill sent to bank for collection)  
18 May  Devendra  Dr.  10,200  
To Bill sent for collection A/c  10,000  
To Bank A/c  200  
(The third bill dishonoured and bank paid ₹ 200
as noting charges) 

23 May  Devendra  Dr.  1,000  
To Interest A/c  1,000  
(Interest due to Devendra on account of bills
dishonoured) 

23 May  Cash A/c  Dr.  31,230  
To Devendra  31,230  
(Cash received from Devendra)  
Ledger
Devendra’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2016  2016  
15 Jan  Sales  35,000  15 Jan  Bills Receivable  35,000  
18 Apr  Bank  20,030  23 May  Cash  31,230  
18 May  Bills Sent for Collection  10,000  
18 May  Bank  200  
23 May  Interest  1,000  
66,230  66,230  
Books of Devendra
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Purchases A/c  Dr.  35,000  
To Raghu  35,000  
(Goods purchased from Raghu)  
15 Jan  Raghu  Dr.  35,000  
To Bills Payable A/c  35,000  
(Three bills drawn by Raghu accepted: the first bill for
₹ 5,000 payable after one month, the second for ₹ 20,000 payable after 3 months and the third for ₹ 10,000 payable after 4 months) 

18 Feb  Bills Payable A/c  Dr.  5,000  
To Cash  5,000  
(The first bill discharged on the due date)  
18 Apr  Bills Payable A/c  Dr.  20,000  
Noting Charges A/c  Dr.  30  
To Raghu  20,030  
(The second bill dishonoured and Noting Charges
₹ 30) 

18 May  Bills Payable A/c  Dr.  10,000  
Noting Charges A/c  Dr.  200  
To Raghu  10,200  
(The third bill dishonoured and Noting Charges ₹ 200)  
23 May  Interest A/c  Dr.  1,000  
To Raghu  1,000  
(Interest charged ₹ 1,000 on account of
bills dishonoured) 

23 May  Cash A/c  Dr.  31,230  
To Bank Loan A/c  31,230  
(Bank loan taken for settling Raghu’s account)  
23 May  Raghu  Dr.  31,230  
To Cash A/c  31,230  
(Cash paid to Raghu)  
Ledger
Raghu’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 
2016  2016  
15 Jan  Bills Payable  35,000  15 Jan  Purchases  35,000  
23 May  Cash  31,230  18 Apr  Bills Payable  20,000  
18 Apr  Noting Charges  30  
18 May  Bills Payable  10,000  
18 May  Noting Charges  200  
18 May  Interest  1,000  
66,230  66,230  
Books of Dewan
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Bills Receivable A/c  Dr.  5,000  
Discount Allowed A/c  Dr.  200  
To Raghu  5,200  
(Bill Receivable received from Raghu for one month and
allowed him discount of ₹ 200) 

18 Feb  Cash A/c  Dr.  5,000  
To Bills Receivable A/c  5,000  
(Bill met on maturity)  
13. Vimal purchased goods ₹ 25,000 from Kamal on Jan 15, 2016 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill. Record the necessary journal entries in the books of Kamal and Vimal when.
• The bill was retained by Kamal till the date of its maturity.
• The bill was immediately discounted by Kamal with his bank @ 6% p.a.
• The bill was endorsed by Kamal in favour of his creditor Sharad.
• Five days before its maturity the bill was sent by Kamal to his bank for collection.
The necessary journal entries are shown below:
(i) : The bill was retained by Kamal till the date of its maturity
Books of Kamal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Vimal  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Vimal)  
15 Jan  Bills Receivable A/c  Dr.  25,000  
To Vimal  25,000  
(Vimal’s acceptance received)  
18 Mar  Vimal  Dr.  25,000  
To Bills Receivable A/c  25,000  
(Vimal acceptance dishonoured)  
Books of Vimal
Journal 

Date  Particulars  L.F.  Debit
Amount ₹ 
Credit
Amount ₹ 

2016  
15 Jan  Purchases A/c  Dr.  25,000  
To Kamal  25,000  
(Goods purchased from Kamal)  
15 Jan  Kamal  Dr.  25,000  
To Bills Payable A/c  25,000  
(Bill drawn by Kamal accepted)  
18 Mar  Bills Payable A/c  Dr.  25,000  
To Kamal  25,000  
(Bill drawn by Kamal dishonoured)  
(ii) : The bill was immediately discounted by Kamal with his bank @ 6% p.a.
Books of Kamal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Vimal  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Vimal)  
15 Jan  Bills Receivable A/c  Dr.  25,000  
To Vimal  25,000  
(Vimal’s acceptance received)  
15 Jan  Bank A/c  Dr.  24,750  
Discount A/c  Dr.  250  
To Bills Receivable A/c  25,000  
(Vimal’s acceptance discounted at 6% p.a. with
bank) 

18 Mar  Vimal  Dr.  25,000  
To Bank A/c  25,000  
(Vimal’s acceptance dishonoured)  
Books of Vimal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Purchases A/c  Dr.  25,000  
To Kamal  25,000  
(Goods purchased from Kamal)  
15 Jan  Kamal  Dr.  25,000  
To Bills Payable A/c  25,000  
(Bill drawn by Kamal accepted)  
18 Mar  Bills Payable A/c  Dr.  25,000  
To Kamal  25,000  
(Bill drawn by Kamal dishonoured)  
Case (iii) : The bill was endorsed by Kamal in favour of his creditor Sharad
Books of Kamal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Vimal  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Vimal)  
15 Jan  Bills Receivable A/c  Dr.  25,000  
To Vimal  25,000  
(Vimal’s acceptance received)  
15 Jan  Sharad  Dr.  25,000  
To Bills Receivable A/c  25,000  
(Vimal’s acceptance endorsed to Sharad)  
18 Mar  Vimal  Dr.  25,000  
To Sharad  25,000  
(Vimal’s acceptance endorsed to Kamal dishonoured)  
Books of Vimal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Purchases A/c  Dr.  25,000  
To Kamal  25,000  
(Goods purchased from Kamal)  
15 Jan  Kamal  Dr.  25,000  
To Bills Payable A/c  25,000  
(Bill drawn by Kamal accepted)  
18 Mar  Bills Payable A/c  Dr.  25,000  
To Kamal  25,000  
(Bill drawn by Kamal dishonoured)  
Case (IV): Five days before its maturity the bill was sent by Kamal to his bank for collection
Books of Kamal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2016  
15 Jan  Vimal  Dr.  25,000  
To Sales A/c  25,000  
(Goods tradedto Vimal)  
15 Jan  Bills Receivable A/c  Dr.  25,000  
To Vimal  25,000  
(Vimal’s acceptance received, payable after two months)  
Mar.13  Bill Sent for Collection A/c  Dr.  25,000  
To Bills Receivable A/c  25,000  
(Vimal’s acceptance sent to bank for collection)  
18 Mar  Vimal  Dr.  25,000  
To Bill Sent for Collection  25,000  
(Vimal’s acceptance dishonoured)  
Books of Vimal
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
Case (iii)  
2016  
15 Jan  Purchases A/c  Dr.  25,000  
To Kamal  25,000  
(Goods purchased from Kamal)  
15 Jan  Kamal  Dr.  25,000  
To Bills Payable A/c  25,000  
(Bill drawn by Kamal accepted)  
18 Mar  Bills Payable A/c  Dr.  25,000  
To Kamal  25,000  
(Bill drawn by Kamal dishonoured)  
14. Abdula sold goods to Tahir on Jan 17, 2017 for ₹ 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid ₹ 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of ₹ 18,700 including interest and noting charges. Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.
The necessary journal entries are shown below:
Books of Abdula
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
17 Jan  Tahir  Dr.  18,000  
To Sales A/c  18,000  
(Goods tradedto Tahir)  
17 Jan  Bills Receivable A/c  Dr.  18,000  
To Tahir  18,000  
(Tahir’s acceptance received)  
06 Mar  Tahir  Dr.  18,040  
To Bills Receivable A/c  18,000  
To Cash  40  
(Tahir’s acceptance dishonoured and ₹ 40 paid as
noting charges) 

06 Mar  Tahir  Dr.  660  
To Interest A/c  660  
(Interest charged from Tahir on account of bill
dishonoured) 

12 Mar  Cash A/c  Dr.  18,700  
To Tahir  18,700  
(Tahir cleared his account by paying cash)  
Ledger
Tahir’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
17 Jan  Sales  18,000  17 Jan  Bills Receivable  18,000  
06 Mar  Bills Receivable  18,000  11 Mar  Cash  18,700  
06 Mar  Cash  40  
06 Mar  Interest  660  
36,700  36,700  
Books of Tahir
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
17 Jan  Purchases A/c  Dr.  18,000  
To Abdula  18,000  
(Goods purchased from Abdula)  
17 Jan  Abdula  Dr.  18,000  
To Bills Payable A/c  18,000  
(Bill drawn by Abdula accepted, payable after 15 days)  
06 Mar  Bills Payable A/c  Dr.  18,000  
Noting Charges A/c  Dr.  40  
To Abdula  18,040  
(Abula’s bill dishonoured)  
07 Mar  Interest A/c  Dr.  660  
To Abdula  660  
(Interest charged on account of bill dishonoured)  
11 Mar  Abdula  Dr.  18,700  
To Cash A/c  18,700  
(Cash paid to Abdula)  
Ledger
Abdula’sAccount 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
17 Jan  Bills Payable  18,000  17 Jan  Purchases  18,000  
11 Mar  Cash  18,700  06 Mar  Bills Payable  18,000  
06 Mar  Noting Charges  40  
06 Mar  Interest  660  
36,700  36,700  
15. Asha sold goods worth ₹ 19,000 to Nisha on March 02, 2017. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.
Record the necessary journal entries in the books of Asha and Nisha.
The necessary journal entries are presented below
Books of Asha
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
02 Mar  Nisha  Dr.  19,000  
To Sales A/c  19,000  
(Goods tradedto Nisha)  
02 Mar  Cash A/c  Dr.  4,000  
Bills Receivable A/c  Dr.  15,000  
To Nisha  19,000  
(Cash and Nisha’s acceptance received)  
02 Mar  Bank A/c  Dr.  14,635  
Discount A/c  Dr.  375  
To Bills Receivable A/c  15,000  
(Nisha’s acceptance discounted with bank at 10% p.a.)  
Note: In this question rate of discount is not
given, the rate of discount (10% p.a.) has been assumed). 

05 Jun  Nisha  Dr.  15,030  
To Bank A/c  15,030  
(Nisha’s acceptance dishonoured and bank
paid ₹ 30 as noting charges) 

Books of Nisha
Journal 

Date  Particulars  L.F.  Debit
₹ 
Credit₹  
2017  
02 Mar  Purchases A/c  Dr.  19,000  
To Asha  19,000  
(Goods purchased from Asha)  
02 Mar  Asha  Dr.  19,000  
To Bills Payable A/c  15,000  
To Cash A/c  4,000  
(Asha’s bill accepted payable after three month and
₹ 4,000 paid in cash) 

Jun.05  Bills Payable A/c  Dr.  15,000  
Noting Charges A/c  Dr.  30  
To Asha  15,030  
(Asha’s bill dishonoured)  
16. On Feb. 02, 2017, Verma purchased from Sharma goods for ₹ 17,500. Verma paid ₹ 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.
Gupta for the full settlement of a debt of ₹ 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹ 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹ 15,500 which includes noting charges and interest. Verma settled Sharma’s claim by cheque for the same amount.
Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma’s and Gupta’s accounts in the books of Sharma. Sharma’s account in the books of Verma. And also Sharma’s account in the books of Gupta.
The necessary journal entries are given below:
Books of Sharma
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
02 Feb  Verma  Dr.  17,500  
To Sales A/c  17,500  
(Goods tradedto Verma)  
02 Feb  Cash A/c  Dr.  2,500  
Bills Receivable A/c  Dr.  15,000  
To Verma  17,500  
(Cash ₹ 2,500 and Promissory Note ₹ 15,000 received
from Verma for 60 days) 

02 Feb  Gupta A/c  Dr.  15,400  
To Bills Receivable A/c  15,000  
To Discount Received A/c  400  
(Promissory Note endorsed to Gupta in full settlement
of amount due to him) 

05 Apr  Discount Received A/c  Dr.  400  
Verma  Dr.  15,050  
To Gupta  15,450  
(Promissory Note issued by Verma dishonoured
and Gupta paid ₹ 50 as noting charges) 

Note: In this question ₹ 5,000 is given as noting charges,
there is mistake. Here ₹ 50 has been taken as noting charges instead of ₹ 5,000). 

06 Apr  Interest A/c  Dr.  50  
To Gupta  50  
(Interest of ₹ 50 debited to Gupta, on account of
dishonour of Promissory Note) 

06 Apr  Gupta  Dr.  15,500  
To Bank A/c  15,500  
(Gupta’s A/c settled)  
06 Apr  Bank A/c  Dr.  15,050  
To Verma  15,050  
(Cheque received from Verma for the amount due from him)  
Ledger
Verma’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
02 Feb  Sales  17,500  02 Feb  Cash  2,500  
06 Apr  Gupta  15,050  02 Feb  Bills Receivable  15,000  
06 Apr  Bank  15,050  
32,550  32,550  
Gupta’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 
2017  2017  
02 Feb  B/R  15,000  01 Apr  Balance b/d  15,400  
02 Feb  Discount Received  400  06 Apr  Verma  15,050  
02 Feb  Bank  15,500  06 Apr  Discount Reserved  400  
06 Apr  Interest  50  
30,900  30,900  
Books of Verma
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
02 Feb  Purchases A/c  Dr.  17,500  
To Sharma  17,500  
(Goods purchased from Sharma)  
02 Feb  Sharma  Dr.  17,500  
To Bills Payable A/c  15,000  
To Cash A/c  2,500  
(Cash ₹ 2,500 paid and Promissory Note made for
the balance) 

06 Apr  Bills Payable A/c  Dr.  15,000  
Noting Charges A/c  Dr.  50  
To Sharma  15,050  
(Promissory Note dishonoured on maturity)  
06 Apr  Sharma  Dr.  15,050  
To Bank A/c  15,050  
(Payment made to Sharma through cheque)  
Ledger
Sharma’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 
2017  2017  
02 Feb  Cash  2,500  02 Feb  Purchases  17,500  
02 Feb  Bills Payable  15,000  06 Apr  Bills Payable  15,000  
06 Apr  Bank  50  06 Apr  Noting Charges  50  
30,900  30,900  
Books of Gupta
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
02 Feb  Bills Receivable A/c  Dr.  15,000  
Discount Allowed A/c  Dr.  400  
To Sharma  15,400  
(Promissory Note ₹ 15,000 received from Sharma in
full settlement for 60 days) 

06 Apr  Sharma  Dr.  15,450  
To Bills Receivable A/c  15,000  
To Discount Allowed A/c  400  
To Bank A/c  50  
(Promissory note established from Sharma, dishonoured)  
06 Apr  Sharma  Dr.  50  
To Interest A/c  50  
(Interest ₹ 50 credited on account of Promissory Note
dishonoured) 

06 Apr  Bank A/c  Dr.  15,500  
To Sharma  15,500  
(Cheque received from Sharma)  
Ledger
Sharma’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount
₹ 
Date  Particulars  J.F.  Amount
₹ 
2017  2017  
01 Feb  Balance b/d  15,400  02 Feb  Bills Receivable  15,000  
06 Apr  Bills Receivable  15,000  02 Feb  Discount Allowed  400  
06 Apr  Discount Allowed  4,000  06 Apr  Bank  15,500  
06 Apr  Bank  50  
06 Apr  Interest  50  
30,900  30,900  
17. Lilly sold goods to Mathew on 1.3.2017 for ₹ 12,000 and drew upon Mathew a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a nonbusiness day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act.1881. The bill was dishonoured by Mathew and Lilly paid ₹ 45 as noting charges. Mathew settled the claim of Lilly five days after the dishonour of the bill by a cheque, which includes interest @ 12% for the term of the bill. Journalise the above transactions in the books of Lilly and Mathew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.
The transactions are journalized as follows:
Books of Lilly
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Mar  Mathew  Dr.  12,000  
To Sales A/c  12,000  
(Goods tradedto Mathew)  
01 Mar  Bills Receivable A/c  Dr.  12,000  
To Mathew  12,000  
(Mathew’s acceptance payable after two months received)  
01 Mar  Bank A/c  Dr.  11,820  
Discount A/c  Dr.  180  
To Bills Receivable A/c  12,000  
(Mathew’s bill discounted at 9% p.a.)  
03 May  Mathew A/c  Dr.  12,045  
To Bank A/c  12,045  
(Mathew’s acceptance dishonoured bank paid ₹ 45 as
noting charges) 

Note: In this question, May 04 has been considered as
Holiday, so the date of maturity will be 03 May, 2017 in place of May 04, 2017. 

08 May  Mathew  Dr.  241  
To Interest A/c  241  
(Interest @ 12% credited to Mathew on account of bill dishonoured)  
08 May  Bank A/c  Dr.  12,286  
To Mathew  12,286  
(Cheque received from Mathew for the amount due from him)  
Ledger
Mathew’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
01 Mar  Sales  12,000  01 Mar  Bills Receivable  12,000  
03 May  Bank  12,045  08 May  Bank  12,286  
08 May  Interest  241  
24,286  24,286  
Books of Mathew
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Mar  Purchases A/c  Dr.  12,000  
To Lilly  12,000  
(Goods purchased from Lilly)  
01 Mar  Lilly  Dr.  12,000  
To Bills Payable A/c  12,000  
(Lilly’s acceptance payable after two months accepted)  
03 May  Bills Payable A/c  Dr.  12,000  
Noting Charges A/c  Dr.  45  
To Lilly  12,045  
(Bill drawn by Lilly dishonoured)  
08 May  Interest A/c  Dr.  241  
To Lilly  241  
(Interest charged @ 12% from Lilly on account of bill dishonoured)  
08 May  Lilly  Dr.  12,286  
To Bank A/c  12,286  
(Amount paid to Lilly through cheque)  
Ledger
Lilly’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
01 Mar  Bills Payable  12,000  01 Mar  Purchases  12,000  
09 May  Bank  12,286  03 May  Bills Payable  12,000  
03 May  Noting charges  45  
08 May  Interest  241  
24,286  24,286  
18. Kapil purchased goods for ₹ 21,000 from Gaurav on 1.2.2017 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2017 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid ₹ 100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gourav.
The necessary journal entries are shown below:
Books of Gaurav
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Feb  Kapil  Dr.  21,000  
To Sales A/c  21,000  
(Goods tradedto Kapil)  
01 Feb  Bills Receivable A/c  Dr.  21,000  
To Kapil  21,000  
(Kapil’s acceptance received)  
25 Feb  Bills Sent for Collection A/c  Dr.  21,000  
To Bills Receivable A/c  21,000  
(Bill Receivable sent to bank for collection)  
04 Mar  Kapil  Dr.  21,100  
To Bill Sent for Collection A/c  21,000  
To Bank A/c  100  
(Kapil’s acceptance dishonoured)  
Books of Kapil
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Feb  Purchases A/c  Dr.  21,000  
To Gaurav  21,000  
(Goods purchased from Gaurav)  
01 Feb  Gaurav  Dr.  21,000  
To Bills Payable A/c  21,000  
(Bill drawn by Gaurav payable after one month
accepted) 

04 Mar  Bills Payable A/c  Dr.  21,000  
Noting Charges A/c  Dr.  100  
To Gaurav  21,100  
(Bill drawn by Kapil dishonoured)  
19. On Feb. 14, 2017 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On 10 Apr, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹ 2,000 in cash and draw a new bill for the balance including interest ₹ 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.
Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.
The necessary journal entries are recorded below:
Books of Rashmi
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
14 Feb  Alka  Dr.  7,500  
To Sales A/c  7,500  
(Goods tradedto Alka)  
14 Feb  Cash A/c  Dr.  500  
Bills Receivable A/c  Dr.  7,000  
To Alka  7,500  
(Cash received ₹ 500 and the bill accepted by Alka)  
10 Apr  Alka  Dr.  7,000  
To Bills Receivable A/c  7,000  
(Alka got the bill cancelled)  
10 Apr  Cash A/c  Dr.  2,000  
To Alka  2,000  
(Received cash from Alka)  
10 Apr  Alka  Dr.  500  
To Interest A/c  500  
(Interest charged on the amount due from Alka)  
10 Apr  Bills Receivable A/c  Dr.  5,500  
To Alka  5,500  
(Alka’s acceptance payable of two months received)  
13 June  Cash A/c  Dr.  5,500  
To Bills Receivable A/c  5,500  
(Alka’s acceptance met on due date)  
Ledger
Alka’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
14 Feb  Sales  7,500  14 Feb  Cash  500  
10 Apr  Bills Receivable  7,000  14 Feb  Bills Receivable  7,000  
10 Apr  Interest  500  10 Apr  Cash  2,000  
10 Apr  Bills Receivable  5,500  
15,000  15,000  
Books of Alka
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
14 Feb  Purchases A/c  Dr.  7,500  
To Rashmi  7,500  
(Goods purchased from Rahsmi)  
14 Feb  Rashmi  Dr.  7,500  
To Cash A/c  500  
To Bills Payable A/c  7,000  
(Cash paid to Rashmi ₹ 500 and a bill for ₹ 7,000
drawn by Rashmi accepted) 

10 Apr  Bills Payable A/c  Dr.  7,000  
To Rashmi  7,000  
(Bill cancelled before maturity)  
10 Apr  Rashmi  Dr.  2,000  
To Cash A/c  2,000  
(Cash paid to Rashmi)  
10 Apr  Interest A/c  Dr.  500  
To Rashmi  500  
(Interest due to Rashmi)  
10 Apr  Rashmi  Dr.  5,500  
To Bills Payable A/c  5,500  
(Rashmi’s acceptance payable after two months
accepted) 

13 June  Bills Payable A/c  Dr.  5,500  
To Cash A/c  5,500  
(The bill met on due date)  
Ledger
Rashmi’s Account 

Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
14 Feb  Cash  500  14 Feb  Purchases  7,500  
14 Feb  Bills Payable  7,000  10 Apr  Bills Payable  7,000  
10 Apr  Cash  2,000  10 Apr  Interest  500  
10 Apr  Bills Payable  5,500  
15,000  15,000  
20. Nikhil sold goods for ₹ 23,000 to Akhil on Dec. 01, 2017. He drew upon Akhil a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil discounted the bill immediately with his bank @12 p.a. On the due date Akhil dishonoured the bill of exchange and the bank paid ₹ 100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest @10% p.a. which he agreed. The new bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept ₹ 10,000 in cash immediately and drew a third bill upon him including interest of ₹ 500. Nikhil agreed to Akhil’s request. The third bill was payable after one month. Akhil met the third bill on its maturity. Record the necessary journal entries in the books of Nikhil and Akhil and also prepare Akhil’s account in the books of Nikhil and Nikhil’s account in the books of Akhil.
The necessary journal entries are recorded as follows:
Books of Nikhil
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Dec  Akhil  Dr.  23,000  
To Sales A/c  23,000  
(Goods tradedto Akhil)  
01 Dec  Bills Receivable A/c  Dr.  23,000  
To Akhil  23,000  
(Akhil’s acceptance received)  
01 Dec  Bank A/c  Dr.  22,540  
Discount A/c  Dr.  460  
To Bills Receivable A/c  23,000  
(Akhil’s acceptance discounted at 12% p.a with bank)  
2018  
04 Feb  Akhil  Dr.  23,100  
To Bank A/c  23,100  
(Akhil’s acceptance dishonoured, bank paid
₹ 100 as noting charges) 

04 Feb  Akhil  Dr.  385  
To Interest A/c  385  
(Interest credited on account of bill dishonoured
at 10% p.a. for two months) 

04 Feb  Bills Receivable A/c  Dr.  23,485  
To Akhil  23,485  
(New acceptance received from Akhil for
next two months received) 

01 Apr  Akhil  Dr.  23,485  
To Bills Receivable A/c  23,485  
(The second bill cancelled one week before
maturity) 

01 Apr  Cash A/c  Dr.  10,000  
To Akhil  10,000  
(Cash received from Akhil)  
01 Apr  Akhil  Dr.  500  
To Interest A/c  500  
(Interest due from Akhil for the bill)  
01 Apr  Bills Receivable A/c  Dr.  13,985  
To Akhil  13,985  
(Bill from Akhil received)  
May 04  Cash A/c  Dr.  13,985  
To Bills Receivable A/c  13,985  
(The third bill met on due date)  
Akhil’s Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
01 Dec  Sales  23,000  01 Dec  Bills Receivable  23,000  
2018  2018  
04 Feb  Bank  23,100  04 Feb  Bills Receivable  23,485  
04 Feb  Interest  385  01 Apr  Cash  10,000  
01 Apr  Bills Receivable  23,485  01 Apr  Bills Receivable  13,985  
01 Apr  Interest  500  
70,470  70,470  
Books of Akhil
Journal 

Date  Particulars  L.F.  Debit
₹ 
Credit Amount
₹ 

2017  
01 Dec  Purchases A/c  Dr.  23,000  
To Nikhil  23,000  
(Goods purchased from Nikhil)  
01 Dec  Nikhil  Dr.  23,000  
To Bills Payable A/c  23,000  
(Bill drawn by Nikhil payable after two months
accepted) 

2018  
04 Feb  Bills Payable A/c  Dr.  23,000  
Noting Charges A/c  Dr.  100  
To Nikhil  23,100  
(Bill dishonoured on due date and ₹ 100 paid by
the holder of bill) 

04 Feb  Interest A/c  Dr.  385  
To Nikhil A/c  385  
(Interest due to Nikhil for the bill dishonoured)  
04 Feb  Nikhil  Dr.  23,485  
To Bills Payable A/c  23,485  
(New bill accepted payable after two months)  
01 Apr  Bills Payable A/c  Dr.  23,485  
To Nikhil  23,485  
(Bill cancelled before maturity)  
01 Apr  Nikhil  Dr.  10,000  
To Cash A/c  10,000  
(Cash paid to Nikhil)  
01 Apr  Interest A/c  Dr.  500  
To Nikhil  500  
(Interest due to Nikhil for bill cancellation)  
01 Apr  Nikhil  Dr.  13,985  
To Bills Payable A/c  13,985  
(New bill accepted payable after one month)  
May 04  Bills Payable A/c  Dr.  13,985  
To Cash A/c  13,985  
(The third bill met on maturity)  
Nikhil Account  
Dr.  Cr.  
Date  Particulars  J.F.  Amount ₹  Date  Particulars  J.F.  Amount ₹ 
2017  2017  
01 Dec  Bills Payable  23,000  01 Dec  Purchases  23,000  
2018  2018  
04 Feb  Bills Payable  23,485  04 Feb  Bills Payable  23,000  
01 Apr  Cash  10,000  04 Feb  Noting Charge  100  
01 Apr  Bills Payable  13,985  04 Feb  Interest  385  
01 Apr  Bills Payable  23,485  
01 Apr  Interest  500  
70,470  70,470  
21. On Jan 01, 2017 Vibha sold goods worth ₹ 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of ₹ 200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.
The necessary journal entries are recorded as follows:
Books of Vibha
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Jan  Sudha  Dr.  18,000  
To Sales A/c  18,000  
(Goods tradedto Sudha)  
01 Jan  Bills Receivable A/c  Dr.  18,000  
To Sudha  18,000  
(Sudha’s acceptance received)  
01 Jan  Geeta  Dr.  18,000  
To Bills Receivable A/c  18,000  
(Sudha’s acceptance endorsed in favour of Geeta)  
27 Feb  Sudha  Dr.  18,000  
To Geeta  18,000  
(Sudha cancelled the bill five days before the maturity)  
27 Feb  Geeta  Dr.  18,000  
To Cash A/c  18,000  
(Cash paid to Geeta)  
27 Feb  Sudha  200  
To Interest A/c  200  
(Interest credited to Sudha on account of
cancelling the bill ) 

27 Feb  Bills Receivable A/c  Dr.  18,200  
To Sudha  18,200  
(New bill received from Sudha)  
02 Mar  Cash A/c  Dr.  18,200  
To Sudha  18,200  
(Sudha’s acceptance met on due date)  
22. Following was the position of debtor and creditor of Gautam as on 1.1.2017.
Debtors Creditors
₹ ₹
Babu 5,000 –
Chanderkala 8,000 –
Kiran 13,500 –
Anita 14,000 –
Anju – 5,000
Sheiba – 12,000
Manju – 6,000
The following transactions took place in the month of Jan 2017:
Jan. 02 Drew on Babu at two months after date at full settlement for ₹ 4,800. Babu accepted the bill and returned it on 5.1.2017.
Jan. 04 Babu’s bill discounted for ₹ 4,750.
Jan. 08 Chanderkala sent a promissory note for ₹ 8,000 payable three months after date.
Jan. 10 Promissory note established from Chanderkala discounted for ₹ 7,900
Jan. 12 Accepted Sheiba draft for the amount due payable two months after date.
Jan. 22 Anita sent his promissory note payable after two months.
Jan. 23 Anita’s promissory note endorsed in favour of Manju.
Jan. 25 Accepted Anju’s draft payable after three months.
Jan. 29 Kiran sent ₹ 2,000 in cash and a promissory note for the balance payable after three months.
Record the above transactions in the proper subsidiary books.
The transactions are recorded in the books below:
Bills Receivable Book  
No.  Date of Bill
2017 
Date Received
2016 
From whom
of Bill 
Drawer
whom received 
Acceptor  Where  Term
Payable 
Due date
2016 
L.F.  Amount
₹ 
Cash
Book Folio 
Remarks 
01  02 Jan  05 Jan  Babu  Self  Babu  2 months  05 Mar  4,800  
Total  4,800 
Bills Payable Book  
No.  Date of Bill
2017 
To Whom
Given 
Drawer  Payee  Where
payable 
Term  Due date
2017 
Ledger  Amount
₹ 
Date
paid 
Cash
Book Folio 
Remarks 
01  12 Jan  Sheiba  Sheiba  –  2 months  15 Mar  12,000  
02  25 Jan  Anju  Anju  –  2 months  28 Apr  5,000  
Total  17,000 
Cash Book  
Dr.  Cr.  
Date  Particulars  L.F.  Cash
₹ 
Bank
₹ 
Date  Particulars  L.F.  Cash
₹ 
Bank
₹ 
2017  2017  
04 Jan  Bills Receivable  4,750  
10 Jan  Bills Receivable  7,900  
29 Jan  Kiran  2,000  31 Jan  Balance c/d  2,000  12,650  
2,000  12,650  2,000  12,650  
Books of Gautam
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
05 Jan  Discount Allowed A/c  Dr.  200  
To Babu  200  
(Babu’s acceptance received and allowed him
discount ₹ 200) 

04 Jan  Discount A/c  Dr.  50  
To Bills Receivable A/c  50  
(Babu’s acceptance discounted with a discount
charge of ₹ 50) 

08 Jan  Bills Receivable A/c  Dr.  8,000  
To Chanderkala  8,000  
(Promissory Note from Chanderkala received)  
10 Jan  Discount A/c  Dr.  100  
To Bills Receivable A/c  100  
(Chanderkala’s Promissory Note discounted with bank
at discount of ₹ 100) 

22 Jan  Bills Receivable A/c  Dr.  14,000  
To Anita  14,000  
(Promissory note established from Anita)  
23 Jan  Manju  Dr.  14,000  
To Bills Receivable A/c  14,000  
(Anita’s Promissory Note endorsed to Manju)  
29 Jan  Bills Receivable A/c  Dr.  11,500  
To Kiran  11,500  
(Promissory Note from Kiran received)  
23. On Jan. 01, 2017 Harsh accepted a month bill for ₹ 10,000 drawn on him by Tanu for latter’s benefit. Tanu discounted the bill on same day @ 8% p.a. On the due date Tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance. Record the journal entries in the Books of Tanu and Harsh.
The journal entries recorded are shown below:
Books of Tanu
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Jan  Bills Receivable A/c  Dr.  10,000  
To Harsh  10,000  
(Harsh’s acceptance received)  
01 Jan  Bank A/c  Dr.  9,933  
Discount A/c  67  
To Bills Receivable A/c  10,000  
(Harsh’s acceptance discounted at 8% p.a.
for one month) 

04 Feb  Harsha  Dr.  10,000  
To Bank A/c  10,000  
(Harsh’s account settled by paying amount
due to Harsh through cheque) 

Books of Harsh
Journal 

Date  Particulars  L.F.  Debit ₹  Credit₹  
2017  
01 Jan  Tanu  Dr.  10,000  
To Bills Payable A/c  10,000  
(Bill drawn by Tanu accepted)  
04 Feb  Bank A/c  Dr.  10,000  
To Tanu  10,000  
(Cheque received from Tanu)  
04 Feb  Bills Payable A/c  Dr.  10,000  
To Bank A/c  10,000  
(Bill drawn by Tanu met on due date)  
Concepts covered in this chapter –
 Meaning of Bill of Exchange
 Parties to a Bill of Exchange
 Promissory Note
 Parties to a Promissory Note
 Advantages of Bill of Exchange
 Maturity of Bill
 Discounting of Bill
 Endorsement of Bill
 Accounting Treatment
 In the Books of Acceptor/Promissor
Conclusion
NCERT Solutions for Class 11 Accountancy Chapter 8 provides a wide degree of illustrative examples; which assists the students to comprehend and learn quickly. The above mentioned are the illustrations for the Class 11 CBSE syllabus. For more solutions and study materials of NCERT solutions for Class 11 Accountancy, visit BYJU’S or download the app for more information.
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