IMPORTANT RULES WHILE SOLVING

BILLS OF EXCHANGE
1) Read line by line and pass the journal entries considering the point of view of the person in whose
books we are passing entries.

2) Period of Bill is calculated from date of making of bill if bill is made “After Date” & from date of
acceptance if bill is made “After Sight”.

3) Interest on Bill Discounting is calculated from Date of Discounting to Maturity Date of Bill.

4) Interest on Renewal of Bill is calculated on Remaining Amount for Remaining Period.

5) Rebate on Retirement of Bill is calculated from Date of Payment to Maturity Date of Bill.

6) Money of Noting charges is paid by person having the Bill & Noting Charges is recorded as
expense by person who dishonours the bill.

7) Steps of Renewal of Bill:

a) Cancellation of Old Bill
b) Interest due
c) Cash entry
d) New Bill

8) If sum starts directly with drawing of bill, that means initially some amount was already payable or
receivable. So there will be Opening Balance in the ledger.
 I) CALCULATION OF DUE DATE OF THE BILL

Q1. If the bill is drawn and accepted on 7th October 2000 for the period of 3months, its due date
would be____.

Q2. It is drafted on 10th February, 2001 for 2 months, and it is accepted on 14th February, 2001.

Q3. Calculate due date of the bill 'after date', drawn on 15th May, 2001 for the period of 90 days and it
is accepted on 20th May, 2001.

Q4. Calculate due dates for the following bills:

Sr. No Date of Bill Period of Bill Sr. No. Date of Bill Period of Bill
1 28/01/2008 1 Month 2 31/01/2010 1 Month

3 13/06/2011 60 Days 4 23/10/2010 3 Month

5 01/03/2012 2 Months 6 30/06/2011 4 Months

Q5. Calculate due dates for the following bills:

Sr. Date of Bill Period of Type of Bill Date of Date of

No Bill Presentation Acceptance
1 05/01/2010 3 Months After Date 05/01/2010 07/01/2010

2 12/03/2010 45 Days After Date 12/03/2010 12/03/2010

3 15/05/2009 3 Months After Sight 15/05/2009 20/05/2009

4 27/08/2010 2 Months After Sight 29/08/2011 30/08/2011

Q6. Shridhar Pai sold goods of 10,000 to Shripati Pol on 5th April, 2011 on credit and drew a bill of
exchange for 2 months. On the same date Shripati Pol accepted and returned it to Sridhar Pai. On the
due date the bill was presented by shridhar Pai and honoured by Shripati Pol.
Give Journal entries in the books of Shridhar Pai and Shripati Pol to record the above bills transactions.

Q7. Same Question as Above but the bill was dishonoured on the due date.

Q8. Same Question as Above but the bill was dishonoured on the due date and noting charges paid
50/-

Q9. Asha Devi sold goods of 5,000 to Usha Devi on 5th April, 2011 on credit and drew a bill of
exchange for 2 months. On the same date Usha Devi accepted and returned to Asha. Asha Devi
retained with her till it's due date. On the due date the bill was presented for payment and honoured.
Give Journal entries in the books of Asha Devi and Usha Devi to record the above bills.transactions.
Q10. On 10th August, 2010 Ram drew a after date bill of 10,000 for 3 months on Laxman. On 16th
August, 2010. Ram purchased goods on credit from Bharat for 15,000. On the same date Ram
endorsed Laxman's bill in favour of Bharat and paid the balance by cheque.
You are required to pass journal entries in the books of Ram, Laxman and Bharat assuming that:
(A) On the due date Laxman honoured his acceptance presented by Bharat.
(B) On due date Laxman dishhonour the bill and Bharat paid noting charges ₹50.

Q11. On 7th July, 2010 Sindhutai sold goods to Bahinabai on credit for 3 months for 21,000. For
discharging amount due Bahinabai paid cash of ₹5,000 and accepted bill for the balance at 2 months.
On the same date Sindhutai discounted the bill with her bank for 15,820.
You required to pass journal entries in the books of Sindhutai assuming that, On due date the bill is
dishonoured and Sindhutai's bank paid noting charges * 100.

Q12. On 28th Feb., 2011 Kumar purchased goods from Kishor for 25,000 and gave his acceptance after
sight for 60 days on 2nd March, 2011 for the amount due. On the same date Kishor deposited the bill
into bank for collection On the due date Kumar honoured his acceptance.
(A)You are required to pass journal entries in the books of both the parties.
(B)You are required to pass journal entries in the books of Kishor and Kumar assuming that on due date
Kumar dishonoured his acceptance and bank paid noting charges 250.

Q13. Amarnath sells goods for 1,000 to Badrinath and draws a bill at three months for the amount.
Badrinath accepts it and returns to Amarnath. Badrinath retires his acceptance under a rebate of 10.
Record the transaction in the books of Amarnath and Badrinath.

Q14. Soham sold goods to Rohan worth 30,000 on 1st March, 2010. Rohan accepted a bill for three
months drawn on him by Soham on 1st March, 2010. On 21st May, Rohan requested that the bill be
renewed for a further period of two months. Soham agreed provided 10% interest p.a. would be
charged. Soham then drew a new bill for the amount of original plus interest at 10% p.a. for two
months. Rohan accepted the new bill. On the due date the new bill was honoured.
You are required to give journal entries in the books of Soham & Rohan.

Q15. Sharad sold goods to Damodar worth 20,000, taking a bill of exchange at 3 months, dated 1st
July, 2010.On 4th August he discounted the bill at 15% p.a. with his bank. On maturity the bill was
returned by the bank as dishonoured and Sharad had to pay the amount of bill to the bank, Damodar
paid 8,000 to Sharad and accepted new bill at three months for 12,000 plus 18% p.a. interest. But,
before maturity, he became insolvent and only 50% amount was received as first and final dividend
from his estate.
You are required to give journal entries in the books of Sharad and Damodar.

Q16. On 14th May, 2010 Vinita bought goods for 16,000 from Vasudha and agreed to pay the amount
due in two equal installments falling due for payment after 3 and 4 months. Accordingly on the same
day Vasudha drew two bills for the equal amount for 3 and 4 months period respectively which Vinita
accepted and returned immediately. On 21st May Vasudha sent 4 month acceptance to her bank for
collection.On the due date of the respective bills; Vinita honoured 3 month acceptance and
dishonoured the second for which Vasudha paid noting charges 40 and her Bank debited 30 for Bank
charges. However on 21st September, 2010 Vinita issued a cheque in full settlement of her account.
Pass the journal entries in the books of Vasudha and Vinita.
Q17.

Q18. On 18th Nov, 2011 Swapnil sold on credit for 12,000 to Abhijit on the condition that he should
pay the amount due in two installments of 5,000 and 7,000 due for payment after 2 and 3 months by
accepting the bills of exchange. Accordingly, Abhijit accepted two bills and returned to Swapnil. On
21st Nov. Swapnil sent 2 months acceptance to his bank for collection and discounted 3 months
acceptance with his bank @ 12% p.a. On the due date of the respective bills Abhijit honoured 2
months acceptance and dishonoured 3 months acceptance for which bank paid noting charges 80.
Pass the journal entries in the books of Swapnil and prepare Abhijit's account in his ledger.

Q19. On 10th August, 2011 Ramchandra drew a bill of 11,000 for 90 days after date on Vikaschandra.
On 16th August, 2011 Ramchandra purchased goods from Harishchandra worth 15,000 at 10% trade
discount on credit. On the same date Ramchandra endorsed Vikaschandra's bill in favour of
Harishchandra and paid the balance by cheque. On the same date Harishchandra discounted the bill
with his bank for 10,750.
On the date of maturity of a bill Government declared emergent holiday; Harishchandra's bank
presented the bill, as per the provisions of Negotiable Instrument Act, which was met by Vikaschandra.
You are required to pass journal entries in the books of Ramchandra, Vikaschandra and Harishchandra.

Q20. On 5th September, 2010 Tinku accepted a bill of 6000 drawn by Rinku for 3 month aftersight. This
bill was drawn for amount which Tinku owed to Rinku for goods brought on credit. On same date Rinku
purchased goods from Pinku for 8500. For this settlement of amount due, Rinku endorsed Tinku's
acceptance in favour of Pinku and accepted 2 months bill for the balance.On 5th October, 2010 Pinku
discounted both the bills with his bank @ 15% p.a. On the due date Tinku honoured his acceptance
while Rinku was unable to meet the payment for her acceptance. Pinku's bank paid noting charges
100.
Pass journal entries in the books of Pinku and also prepare Tinku & Pinku ledger accountsin the books
of Rinku.
Q21. Amit of Malkapur draws a bill on Ajay of Amaravati for 12,000 at 3 months. Ajay accepts and
return to Amit. Amit then sent the bill into his bank for collection.On due date Ajay finds himself
unable to make payment of the bill and requests Amit to renew it Amit accepted a proposal on the
condition that Ajay should pay 2,000 on account along with interest 500 in cash; and should accept
new bill for the balance at 2 months. These arrangements were carried through. One month before
Ajay retired his acceptance by paying 9,700.
Give journal entries and Ajay's account in the books of Amit.

Q22. On 1st October, 2011 Nehalika draws a bill for 20,000 on Tanaya for 4 months period. The bill was
duly accepted and returned to Nehalika. One month after the date Nehalika discounted the bill with
her bank @ 12% p.a.Before due date Tanaya dishonoured her acceptance. Bank paid noting charges
125. Tanaya requested to renew the bill for further period of 2 months. Nehalika agreed, she took the
bill back from bank and received new acceptance for 50% amount of the bill plus full amount of noting
charges and cash for balance 50% plus interest 200. Before the due date Tanaya was declared as
insolvent andnothing could be recovered from her private estate.
Write Journal of Nehalika and Tanaya for the above bill transactions.

Q23. Snehal owes Akshay 25,000. Akshay draws a bill for 21,000 on Snehal for 3 months period and
received the cheque for the balance. The bill is duly accepted and returned to Akshay. On the same
date Akshay endorsed Snehal's acceptance to Amod.On the due date Amod informed Akshay that
Snehal dishonoured her acceptance and paid *175 as noting charges. Akshay then drew new bill for 1
month on Snehal including noting charges and interest 7600, On the due date Snehal honoured the bill
by cheque. Write Journal entries in the books of Akshay and prepare Akshay's account in the books of
Snehal.

Q24. On 7th May, 2011 Barve of Karvenagar draws a bill on Langekar of Latur for 8,000 at 3 months.
Langekar accepts and returns to Barve. Barve then sends the bill into his bank for collection.On due
date Langekar finds himself unable to make the payment of the bill and requests Barve to renew it..
Barve agreed on the condition that Langekar should pay 5,000 in cash, and should accept ₹ new bill for
the balance at 2 months with interest 200. These arrangements were carried through. Before due date
Langekar was declared as insolvent and 1,500 could be recovered from his private estate as first and
final dividend. Give journal entries in the books of Barve & Langekar.

Q25. On 14th May, 2012 Devidas Sheth sold goods on credit and for the said amount due draws a bill on Khushal
Sheth for 30,000 at 4 months. Khushal Sheth accepted it and returned to Devidas Shet. On 17th June, 2012
Devidas Sheth discounted it with his bank @ 16% p.a. On due date Khushal Sheth dishonoured his acceptance
and bank paid the noting charges 250. Then Khushal Sheth requested Devidas Shet to renew it. He agreed on
the condition that Khushal Sheth pay interest on the balance due @ 18% p.a. plus noting charges by cheque,
and should accept new bill for the balance at 2 months.These arrangements were carried through. Before due
date Khushal Sheth was declared as insolvent. On 15 th Dec. 2012 Devidas Sheth recovered 40% of the amount
due from his private estate as final dividend.
Give journal entries in the books of Devidas Sheth, also prepare Devidas Sheth's Account in the books of
Khushal Sheth.

Q26. On 1st April, 2012 Kantilal drew a bill of 18,000 on Maganlal for 4 months. The bill was duly accepted by
Maganlal. On 5th April, 2012 Kantilal endorsed the bill in favour of Shankarlal. However on 1st August, 2012
Maganlal approched to Kantilal and requested bill be renewed for a further period of 3 months at 15% p.a.
Kantilal agreed and paid necessary money to Shankarlal. Before one month of the due date of the new bill
Maganlal retired his acceptance @ 10% p.a.
Pass journal entries in the books of Kantilal and Maganlal.
Q27. Journalise the following bill transactions in the books of Govinda as on 16th November, 2011.
1) Krishna's acceptance to Govinda 9,600 retired one month before due date at rebate 12% p.a.
2) Discounted 4 months acceptance of Kaliya for 15,000 with bank @ 10% p.a..
3) Received cheque and 2 months acceptance drawn on Sudama for 10,000 for the balance due
11,500.
4) Endorsed Vasudeo's acceptance at 60 days of ₹5,000 in favour of Balaram and paid cash 2,500 in
full settlement of his account 7,600.

Q28. Journalise the following bill transactions as on 21st May, 2010 in the books of Pradhan.
A) Renewed Venkatesh's acceptance of 7,000 due on 21st May,2010 with interest ₹500 for 2 mnths.
B) Bank informed that Laxmipati's acceptance of 4,000 which was discounted dishonoured, bank
paid noting charges 85.
C) Veermani informs Pradhan that Sonali's acceptance for 7,000 endorsed to Veermani has been
dishonoured. Noting charges amounted to 80.
D) Shrivasthav honoured his acceptance of 4,900 which was deposited into bank for collection.

Q29. Journalise the following bill transactions as on 31st July, 2011 in the books of Omkarnath.
A) Renewed Vartak's acceptance of 6,000 due on 31st July, 2011 by accepting cash 2,000 and
drawing bill for the balance with interest @ 18% p.a. for 2 months.
B) Accepted a bill of 5,000 at 3 months, drawn by Avinash for the amount due to him ₹6,000 and
balance paid in cash.
C) Fattechand honoured his acceptance of ₹9,000 which was deposited into bank for collection and
bank debited 80 for bank charges.
D) Bank informed that Laxmi's acceptance of 14,000 which was discounted dishonoured, bank paid
noting charges 85. Renewed at Laxmi's request for next 1 month with interest 215.

Q30. Journalise the following transaction on following dates in the books of Aditi.
A) On 1st Feb, 2010 Arti informs Aditi that Aamrapali's acceptance of 12,000 endorsed to him
dishonoured and noting charges paid 250.
B) On 21st Feb, 2010 Aditi renews her acceptance of 17,000 to Arush by paying cash2000 and
accepting new bill for 2 months for the balance plus interest @ 10% p.a.
C) On 15th March, 2010 Namrata retired her acceptance to Aditi of 6,500 by paying cash 6,300.
D) 31st March, 2010 recovered 2,500 from the private estate of Shridhar who was declared as
insolvent, against bill accepted by him of 4,000 which was dishonoured by him on
29thDecember, 2009 and noting charges paid 100.

Q31. Journalise the following transactions on following dates in the books of Vaishnavi.
A) On 1st October, 2011 Shrikant informs Vaishnavi that Navnath's acceptance of 25,000 endorsed
to him dishonoured and noting charges paid 350.
B) On 11th October, 2011 Subhodh's acceptance for 90 days ₹ 6,500 dated and recorded on
24thSeptember, 2010 deposited into bank for collection.
C) On 15th October, 2011 Vaishnavi sold goods to Vinita for 1,500 and received her acceptance for
the same amount, which was endorsed to Vrinda.
D) 25th October, 2011, recovered 25% of the amount due from the private estate of Sampada who
was declared as insolvent, against bill accepted by her for 8,000 which was dishonoured on 29th
September, 2011 and noting charges paid 100.
E) On 31st October, Vaishnavi renews her acceptance of 9,000 to Arundhati by paying cheque 4,000
and accepting new bill for 2 months for the balance plus interest @ 12% p.a.