Q # 1:

A sells goods to B for Rs.20,000 and draws a bill for 3 months. B accepts the bill and returns it
to A. The bill is is honoured on the due date. Give Journal entries in the books of A and B under the
following circumstances.
(a) When the bill is kept by A till due date.
(b) When the bill is endorsed to C, his creditor.
(c) When the bill is sent to bank for collection.
(d) When the bill is discounted with the bank at 12% p.a..

Q # 2:
X sells goods to Y for Rs.15,000 and draws a bill for 3 months. Y accepts the bill and returns it
to X. On maturity the bill is dishonoured by Y. Give Journal entries in the books of X and Y under the
following circumstances.
(a) When the bill is kept by X till due date.
(b) When the bill is endorsed to Z, his creditor.
(c) When the bill is sent to bank for collection.
(d) When the bill is discounted immediately at 12% p.a.

3. on 1st January 2005 X sells goods to Y for Rs. 20000 and draws three bills on him: the first bill
for 60000 for one month, the second for Rs. 10000 for two months and the third for Rs. 40000 for
three month. Y accepts and returns these bills to X.

The first bill is retained by X till the date of maturity. The second bill is discounted by him on 4 th jan. at
12% p.a. with his banker. The third bill is endorsed by X to his creditor A on 5 th jan 2005.

On maturity all the bills are honoured by Y. Give entries in the books of X,Y and A.

4. On 1st July 2005. Aslam sells goods to Akram for Rs.100000 and draws four bills on him the
first for Rs.200000 at one month, the second for Rs.30000 for two months, the third for 40000 for
three months and the fourth for Rs. 10000 at 4 months.

Akram accepts the bills and return them to Aslam. The frist bill is endorsed by Aslam to his creditor
Sarwar on 3rd july. The second bill is discounted by him at 12% p.a. on 14 th July .The third bill is sent to
the bank for collection on 5th July. The fourth bill is retained by him till the due date.

On maturity all the bills are duly present to Akram but returned dishonoured with the exception of
fourth bill. Pass the entries in the books of Aslam and Sarwar.
5. Imran sells goods to Farhan for Rs.16000 and draws a bill for 4 months on him. Farhan accepts
the bill and return it to Imran. After three months Farhan gets the bill retired under a rebate of 12%
p.a. Journalize the transactions in the books of both the parties.

6. on 1st Januray, 2005 Shahid sold goods to Zahid for Rs.15000 and draw a bill for 4 months on
him. Zahid accepts the bill and returned it to Shahid. Shahid got it discounted by his bank at 15% p.a.

On maturity Zahid was not in a position to meet his acceptance. He approached Shahid and requested
him to cancel the old bill and draw on him a new billb for the amount of old bill plus interest at the
rate of 12% p.a. at 3 month. Shahid agreed to the proposal. On the due date of the new bill, Zahid
honoured his acceptance. Give journal entries in books of shahid and zahid.

7. A owes B a sum of Rs. 6000. On 1st januray 2005 he accepts a bill for the amount 3 month
drawn on him by B. B its it discounted with his banker for Rs. 5800. On the due date the bill is
dishonoured, the bank pays Rs. 50 as noting charges. Then A pays Rs.1600 in cash and accepts another
bill drawn on him by B for the due date the bill is honoured by the acceptor A. Pass the journal entries
in the books of B and A.

8. A sold goods to B for Rs.50000 and drew on B a bill for the amount at 3 months. A endorsed
the bill to his creditor C. C endorsed it to his creditor D.D got the bill discounted by his bank at 12%
p.a. On maturity the bill is dishonoured and bank pays Rs.50 for noting charges.

Req. Pass entries in the books A,B,C,D and the bank.

9. On 1st january, 2005, X sells goods to Y for Rs. 30000. X draws three bills on Y the first for Rs.
9000 for one month, the second for Rs. 15000 for two months and the third for Rs. 6000 for 3 months.

The first bill is endorsed by X to his creditor Z on 3 rd january. The second bill is discounted at bank on
4th januray for Rs.14550. The third bill is retained by X untill due date. The first fill is met at maturity.
The second bill is dishonoured and the bank pays Rs. 60 for noting charges. On Y s request, X draws a
fourth b ill on Y for 15150 including Rs. 90 as interest. Y accepts the bill at two months. On maturity,
the third and the fourth bills are honoured. Show the entries in the books of X,Y and Z.

10. Asim sells goods to Akif for Rs. 20000 on March 1, 2005. Asim draws a 3 months bill on Akif
which he accepts. Asim gets it discounted sby his banker at 10% p.a. On the due date the bill is
dishonoured, bank pays Rs.60 as noting charges. However, Akif pays Rs. 8120 in cash.

(Rs. 120 for noting charges and interest) and accepts a new bill for Rs. 12000 for two months. On the
Asim a agrees to the request provided Akif pays Rs. 60 as interest in cash. The last bill is paid by Akif
one month before its maturity under a rebate of Rs. 30.

Req. pass the journal entries in the books of Asim and Akif.
11. Journalise the following transactions in the books of Asif:

(i) Saleem’s acceptance to Asif for Rs. 4000 which Asif endorsed in favour of Rauf was dishonoured.
Rauf paid Rs.20 as noting charges. Asif paid Rs.20 to Rauf by a cheque and received a new acceptance
from Saleem for the amount due plus interest Rs.60.

(ii) Asif renewed his acceptance to Amir for Rs. 3000 by a cheque of Rs. 1200 and a new bill at 3
months at 10% p.a. interest.

(iii) Farid’s acceptance to Asif for 3000 renewed for two months at 12% p.a. interest.

(iv) Asif’s acceptance to Haseeb for Rs. 5000 was got retired one month before its maturity under a
rebate of 12% p.a.

(v) Asif’ s acceptance to Ansar for Rs. 3000 was discharged by Javed’s acceptance to Asif for a similar
amount.

(vi) Asif ‘s acceptance to Farooq for Rs. 5000 was discharged by paying Rs. 2000 in cash and accepting
a new bill for the balance for two months, interest at 12% p.a. being paid in cash.

12. On 1st january, 2005 Mr.Asif sold goods to Mr.Azam for Rs.60000. Azam paid Rs. 12000 in cash
and accepts three bills for balance. The first bill for Rs. 14000 at one month, the second for Rs. 16000
at two months and the third for Rs. 18000 at three months.

Asif endorsed 1st bill to Irfan his creditor on 2nd january in full settlement of Rs. 14200 discounted the
2nd bill at his bank for Rs.15840 and retained the third bill till maturity.

The first bill is met at maturity. The second bill is dishonoured and Rs.100 being paid as noting
charges. Asif charges Rs. 300 for interest and draw on Azam a fourth bill for the amount at three
months. At maturity the 3rd bill was renewed with interest of 10% p.a. for three months. The 5th bill
was duly accepted by Azam. The fourth and fifth bill were met on maturity.

Req. Give journal entries in the books of Asif.

13. On 1st januray 2005, A bought a golden chain for Rs. 20000 from B and accepted two bills of
exchange in settlement, on for Rs.12000 at four months and second for Rs. 8000 payable after six
months. The first bill was honoured on the due date but before the second bill felll due, it was
cancelled by mutual consent and a new bill for three months was accepted by A for the amount of the
second bill plus interest Rs.200. B sent this bill to his bank for collection. But on the due date the bill
was dishonoured.

Req. Record the above transactions in the books of B and A.

INSOLVENCY

14. Salman sold goods to Rizwan for Rs. 50000 on 1 st july, 2005 and drew on him a bill for the
amount payable after four months. Rizwan accept the bill. Salman got it discounted by his bank at
12% p.a. On maturity Rizwan was in a position to pay only Rs.20000 in cash therefore, he approached
Salman for renewal of the bill. Salman agreed and drew a new bill for Rs. 30000 along with and
interest at 15% p.a. for 3 months.

Q # 18:
T drew and M accepted a bill Rs. 20,000 on 1 ST January 2005, payable after two months. T discounted
the bill at his bank at 12% p.a. and remitted half the proceeds to M. On 1 st February 2005, M drew and
T accepted a bill at two months, for Rs. 10,000. M discounted the bill at 12% p.a. and remitted half the
proceeds to T.
On 4th March, M honoured his acceptance but on 4 th April T failed to meet his acceptance and
so M had to take it up. M than drew another bill for the balance due from him plus interest of Rs. 600
which was accepted by T at two months. Before the due date T became insolvent and ON 30 TH June, 25
paisa in the rupee was received as a first and final dividend from his estate.
Pass the Journal entries in the book of M and T account in the books of M.

Q # 19:
On 1st Oct 2005, X drew a bill for Rs. 36,000 on B payable after 2 months for their mutual
accommodation to the extent of ¾ and ¼ respectively. The Bill was dually accepted and returned by B.
X discounted the bill at his bank at 10% p.a. and remitted ¼ of the proceeds to Y. before the due date
X sent him the balance but Y dishonoured the bill on the due date and X had to pay his banker the
amount of bill along with the Noting charges of Rs. 120.
X then drew and Y accepted a fresh bill for the amount due plus interest Rs. 600 for the two months.
On maturity Y paid only Rs. 10,000 to X and requested X to draw on him another bill for the amount
due plus interest Rs. 400. X agreed to the proposal.
But before the due date of the bill, Y became insolvent and X received only 25 paisa in a rupee
which was due to him from Y.
Record the Transaction in X’s and Y’s Journal and also write up Y’s ledger Accounts.

Q # 20:
On 1st January 2005, X draws and Y accepted a bill at three months for Rs. 5,000. On 4 January
X discounted the bill at his bank at 12% p.a. and remitted half the proceeds to Y. On 1 st February 2005,
Y draws and X accepted a bill at three months for Rs. 2,000. On 4 th February 2000, Y discounted the bill
at 12% p.a. and remitted half the proceeds to X. X and Y agreed to share the discounts equally.
At maturity X met his acceptance but Y failed to meet his accepted and X, therefore, had to
pay it, X drew and Y accepted a new bill at three months for the amount of the original bill plus
interest RS. 300. On 1st July 2005, Y became insolvent and X received only 60 paisa in a rupee which
was due to him from Y.
Record the Transaction in Y’s Journal and also write up X’s ledger Accounts.
Q # 21:
Ahmed for the mutual and temporary financial help of himself and and of Bashir draw upon
the latter, a bill of exchange at 3 months for Rs. 24,000 dated 1 st January. Ahmed discount the bill
immediately his backers, the rate of discount being 12% and remit half the proceeds to Bashir. Bashir
for a similar purpose and at the same draw a bill at 3 months on Ahmed, for Rs. 10,000, this bill he
discounted at his banker at 12% and hands half the proceeds to Ahmed. Bashir becomes insolvent on
31st march and a first and final dividend of 50 paisa in the Rupee is paid from his estate on 30 th June.
Make Journal entries in the books of Ahmed and Bashir and prepare the account of Bashir in
Ahmed’s Book. Assume in each case, that one half of the charges for discounting the bill is chargeable
to Ahmed and one half to Bashir.

Q # 22:
For the mutual accommodation, Fida accepted a bill on 1st March, 2005, draws on him by Ali
for Rs. 6,000 at three months. The bill was got discounted at 10% p.a. and the proceeds were share
equally.
On 1st April, 2005, Fida drew a bill for Rs.9,000 on Ali at three months for the same purpose.
Ali accepted the bill. Fida got the bill discounted at 10% p.a. and the proceeds were shared 2/3 to Fida
and 1/3 to Ali. Before the due date of the first bill, Fida sent a cheque to Ali in full settlement of his
account. On 15th June, 2005, Ali became insolvent and his estate paid a dividend of 50 paisa in rupee.
Give Journal entries and Ali’s account in the books of Fida.

Q # 23:
For their mutual accommodation Asim draws a bill for Rs. 10,000 on Danial for three months.
Danial accepts it and return it to Asim. The proceeds of the bills are to be shared by Asim and Danial in
the ratio of 3/5 and 2/5 respectively. The bill is discounted by Asim for Rs. 9,950 and he remits 2/5 of
the proceeds to Danial. Before the due date Danial draws another bill for Rs. 20,000 on Asim at three
months with the help of these proceeds the first bill is met by Danial and remaining proceeds are
shared by Asim and Danial in the ratio of 2/5 and 3/5 respectively. The bill is discounted for Rs. 19900.
Before the due date of the second bill, Asim becomes insolvent and his estate pays only 25% of the
debts.
Pass the entries in the books of both the partners.
Q # 24:
Mohsin draws on Mudassir a bill of exchange for Rs. 5,000 on 1 st January, 2005 at three
months for mutual accommodation. Mudassir accepts the bill and sends it to Mohsin who gets it
discounted for Rs. 4,800 and remits immediately half of the proceeds to Mudassir. On 31 st March,
2005, Mohsin, unable to send the remaining amount to Mudassir, accepts a bill for Rs. 3,600 for three
months which is discounted by Mudassir for Rs. 3,500. Mudassir sends Rs. 900 to Mohsin. Before the
maturity of the bill accepted by Mohsin, he becomes insolvent and 40% is received from his estate as
final dividend.
Pass Journal entries in books of both the parties; also show Mohsin’s account in Mudassir’s
books.

Q # 25:
East for mutual accommodation draws a bill for Rs. 30,000 on West at three months. East gets
the bill discounted by his banker for Rs. 29,250 and remits Rs. 9,750 to West. On maturity East in not
able to send the amount due to West, to enable him to meet the bill. He however, accepts a bill for
Rs. 37,500 which is discounted by West for Rs. 35,250. West meets his acceptance and remits Rs.
1,800 to East. Before the due date of the bill East becomes insolvent and dividend 60 paisa in the
rupee is received from his estate.
Pass Journal entries and show account of East in the books of West.