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Class XIth (Accountancy) By: Arun Attree
M M : 50 Time : __________
TEST ON
BILLS OF EXCHANGE
Q1. On 1st April, 2005 Rahim sold goods to Manoj for Rs. 3,000. On the same day he drew a bill for
the amount at three months. Manoj accepted it and returned to Rahim, who retained the bill till
due date and sent the bill to the banker for collection. In due course, Rahim received the
information from the bank that the bill has been duly met.
Pass Journal entries of these transactions in the books of both the parties.
Q2. On 1st, April, 2006, A owed Rs. 4,000 to B. On 1st May, he accepted a bill for 3 months drawn
on him by B for the amount. ON the due date, the bill was dishonoured, the noting charges
being Rs. 10. Give journal entries in the books on B in each of the following cases.
(1) The bill is held till maturity by B
(2) B endorses the bill in favour of C immediately ; and
(3) The bill is discounted at 6% p.a. immediately.
(4) The bill is sent to bank for collection.
Q3. On 1st August, 2006, Rupesh sold goods of the value of Rs. 10,000 to Bhushan and drew upon
him a bill at two months for the amount. Bhushan accepted the draft. On the due date,
Bhushan expressed his inability to meet the bill and offered to pay Rs. 4,000 in cash and
accepted a new bill for the balance plus interest at 10% p.a. for three months. Rupesh agreed
to this proposal. On maturity this bill was duly met by Bhushan. Pass entries in the books of
Rupesh and Bhushan.
Q4. B. Pal purchased goods on credit from A. Lal and accepted a bill for Rs. 5,000 drawn on him
by A. Lal on 1st June, 2006, for 3 months. A.Lal, got the bill discounted at his bank for Rs.
4,900. Just before the due date, B.Pal approached A. Lal for renewal of the bill. A.Lal agreed
on condition that Rs. 2,000 be paid immediately together with interest on the remaining
amount at 6% per annum for 3 months and that for the remaining balance B. Pal should
accept a new bill for 3 months. These arrangements were carried through. On 7 th December,
2006, B. Pal became insolvent and his estate paid 50%. Give journal entries in the books of
B.Pal and A.Pal.
Q5. Sachin sold goods to Jadeja for Rs. 6000 and drew a bill at two months for the amount Sachin
discounted the bill at 10% p.a. with his bank. On maturity the bill was returned by the bank
dishonoured with Rs. 50 as noting charges. Jadeja paid Rs. 3,000 and the noting charges in
cash and gave another bill at three months for Rs. 3.000 together the 20% p.a. interest but
before maturity Jadeja became insolvent and ultimately paid to his creditors 60 paise in a
Rupee. Pass journal entries in the books of Sachin and Jadeja and prepare Jadeja’s account.
