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Dishonour of the Bill

Amount of not...

Question

Amount of noting charges is actual expense of ?

A

Drawee

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B

Drawer

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C

Banker

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D

Endorsee

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Solution

The correct option is A
Drawee

The drawee bears the noting charges.

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When noting charges of Rs 100 is paid by the endorsee, what will be the impact in the books of drawer?

Q. Manohar drew a bill of exchange on Pushkar, his debtor, for ₹ 20,000 on 1st March 2016 for 3 months. Pushkar accepted the same and returned it to the drawer. Manohar endorsed the bill to Yadu on 1st April 2016 for a debt of equal amount. Yadu discounted it with the bank at 15% p.a. on 1st May 2016. On the due date the bill was dishonoured. (Noting charges amounted to ₹ 100).
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Q. What Journal entry will be passed in the books of drawer (X) and drawee (Y) at the time of dishonour of bill in the following cases:
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Q. A Bill receivable for ₹ 10,000, which had been discounted for ₹ 9,700, is dishonoured and the Bank paid ₹ 20 as noting charges.
Pass entries in the books of drawer and drawee.

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