CHAPTER -10 BILLS OF EXCHANGE AND PROMISSORY NOTES

Q.1 Vijay sold goods to Pritam on 1st September, 2016 for RS...1,06,000. Pritam immediately
accepted a three months bill. Onduedate Pritamrequested thatthe bill be renewed for a fresh
period of twomonths. Vijay agrees provided interest at 9% was paid immediately in cash. To
this Pritam was agreeable. The second bill was met on due date. Give Journal entries in the
books of Vijay and Pritam.

Q.2 On 1st January, 2016, Ankita sells goods for RS...5,00,000 to Bhavika and draws a bill
a tthree months for the amount. Bhavika accepts it and returns it to Ankita. On 1st
March, 2016, Bhavika retires her acceptance under rebate of 12% per annum. Record
these transactions in the journals of Ankita and Bhavika.

Q.3 `Journalise the following transactions in K. Katrak’s books.

(i) Katrak’s acceptance to Basu for RS...2,500 discharged by a cash payment
of RS...1,000 and a new bill for the balance plus RS...50 for interest.
(ii) G. Gupta’s acceptance for RS...4,000 which was endoRs..ed by Katrak to M. Mehta was
dishonoured. Mehta paid
RS...20 noting charges. Bill withdrawn against cheque.
(iii) D. Dalal retires a bill for RS...2,000 drawn on him by Katrak for RS...10 discount.
(iv) Katrak’s acceptance to Patel for RS...5,000 discharged by Patel. Mody’s
acceptance to Katrak for a similar amount.

Q.4 On 1st January, 2016, Vilas draws a bill of exchange for RS...10,000 due for payment
after 3 months on Eknath. Eknath accepts to this bill of exchange. On 4th March, 2016
Eknath retires the bill of exchange at a discount of 12% p.a. You are asked to show the
journal entries in the books of Eknath.

Q.5 On 1st January, 2016, Vilas draws a Bill of Exchange for RS...10,000 due for payment
after 3 months on Eknath. Eknath accepts to this bill of exchange. On 4th March, 2016.
Eknath retires the bill of exchange at a discount of 12% p.a. You are asked to show the
journal entries in the books of Vilas.

Q.6 Mr. David draws two bills of exchange on 1.1.2016 for RS...6,000 and RS...10,000. The
bills of exchange for RS...6,000 is for two months while the bill of exchange for RS...10,000
is for three months. These bills are accepted by Mr. Thomas. On 4.3.2016, Mr. Thomas
requests Mr. David to renew the fiRs..t bill with interest at 18% p.a. for a period of two
months. Mr. David agrees to this proposal. On 20.3.2016, Mr. Thomas retires the acceptance
for RS...10,000, the interest rebate i.e. discount being RS...100. Before the due date of the
renewed bill, Mr. Thomas becomes insolvent and only 50 paise in a rupee could be recovered
from his estate.
You are to give the journal entries in the books of Mr. David.

Q.7 Rita owed RS...1,00,000 to Siriman. On 1st October, 2016, Rita accepted a bill drawn
by Siriman for the amount at 3 months. Siriman got the bill discounted with his bank for
RS...99,000 on 3rd October, 2016. Before the due date, Rita approached Siriman for
renewal
the bill. Siriman agreed on the conditions that RS...50,000 be paid immediately together
with interest ontheremainingamountat 12% per annumfor 3 monthsandforthebalance,
 Rita should accept anew bill at three months. These arrangements were carried out. But
afterwards, Ritabecame insolvent and 40% of the amount could be recovered from his
estate.
Pass journal entries (with narration) in the books of Siriman.

Q.8 On 1st July, 2016 Gorge drewa bill for RS...1,80,000 for 3 month son Harry form
utualaccommodation. Harry accepted the bill of exchange. Gorge had purchased goods
worth RS...1,81,000 from Jack on the same date. Gorge endoRs..ed Harry’s acceptance
to Jack in full settlement. On 1st September, 2016, Jack purchased goods worth
RS...1,90,000 from Harry. Jack endoRs..ed the bill of exchange received from Gorge to
Harry andpaid RS... 9,000 in full settlement of the amount due to Harry. On 1st October,
2016, Harry purchased goods worth RS...2,00,000 from Gorge. Harry paid the amount
due to Gorge by cheque. Give the necessary Journal Entries in the books of Harry and
Gorge.

Q.9 For the mutual accommodation of ‘X’ and ‘Y’ on 1st April, 2016, ‘X’ drew a four months’
bill on ‘Y’ for RS...4,000. ‘Y’ returned the bill after acceptance of the same date. ‘X’
discounts the bill from his bankeRs.. @ 6% per annum and remit 50% of the proceeds to
‘Y’. Onduedate‘X’ is unabletosend theamountdueandtherefore ‘Y’ drawsa bill for
RS...7,000, which is duly accepted by ‘X’. ‘Y’ discounts the bill for RS...6,600 and
sends RS...1,300 to ‘X’. Before the bill is due for payment ‘X’ becomes insolvent.
Later 25 paise in a rupee received from his estate.
Record Journal entries in the books of ‘X’.

Q.10 Anil draws a bill for RS...9,000 on Sanjay on 5th April, 2016 for 3 months, which Sanjay
returns it to Anil after accepting the same. Anil gets it discounted with the bank for RS...
8,820 on 8th April, 2016 and remits one-third amount to Sanjay. On the due date Anil fails
to remit the amount due to Sanjay, but he accepts a bill for RS...12,600 for three months,
which Sanjay discounts it for RS... 12,330 and remits RS... 2,220 to Anil. Before the
maturity of the renewed bill Anil becomes insolvent and only 50% was realized from his
estate on 15th October, 2016.
Pass necessary Journal entries for the above transactions in the books of Anil.

Q.11 On 1st January, 2016, A sells goods for RS...10,000 to B and draws a bill at three months for the
amount. B accepts it and returns it to A. On 1st March, 2016, B retires his acceptance under rebate of
12% per annum. Record these transactions in the journals of B.
Q.12 A draws upon B three Bills of Exchange of RS...3,000, RS...2,000 and RS...1,000 respectively.
A week later his fiRs..t bill was mutually cancelled, B agreeing to pay 50% of the amount in cash
immediately and for the balance plus interest RS...100, he accepted a fresh Bill drawn by A. This
new bill was endoRs..ed to C who discounted the same with his bankeRs.. for RS...1,500. The
second bill was discounted by A at 5%. This bill on maturity was returned dishonoured (nothing
charge being RS...30). The third bill was retained till maturity when it was duly met.
Give the necessary journal entries recording the above transactions in the books of A.
 EXAMS QUESTIONS
1994 Nov
Q.13 On 1st january, 1994 Vinod drew and pramod accepted a bill at three months for Rs. 2000 on 4th January,
1994 Vinod discounted the bill at his bank at 15% p. a and remitted half the proceeds to pramod . On 1st
February, 1994 Pramod drew and Vinnod accepted a bill at four months for Rs. 1500 . On 4th February, 1994
Paramod discounted the bill at 15% p. a with his bank and remitted half the proceeds to Vinod. They both
agreed to share the discount equally.
At maturity Vinod met his acceptance, but Pramod dishnoured his and Vinod had to pay the bill Vinod drew
and Pramod accepted a new bill at three months for the orignal bill plus interest at 18% p. a On 1st July 1994
Pramod became insolvent and only 50 palse in the rupee was received from him
Record the above transactions in Vinod's Journal ( 15 Marks)
1995 - Nov
Q.14 Mr david vows to bills of exchange on 1.1.1995 for Rs. 6000 and Rs. 10,000. The bills of exchange for Rs.
6,000 is for two momths while the bill of exchange for Rs. 10,000 is for three months. These bills are accepted
by Mr. Thomas On 4.3.1995 Mr. Thomas requests Mr. David to renew the first bill with interest at 18% p. a
for a period of two months Mr. David agrees to this proposal. On 20.3.1995 Mr. Thomas retries the acceptance
for Rs. 10,000 the interest rebate i. e discount being Rs. 100 . Before the due date of the renewed bill. Mr.
Thomas becomes insolvent and only 50 paise in a rupee could be recovered from his estate.
You are give the journal entries in the books of Mr. David. (15 Marks)

1997 - May
Q.15 On 1st January 1997 A sells goods for Rs. 10,000 to B and draws a bill at three months for the amount. B
accepts it and returns it to A. On 1st March 1997 , B retries his acceptance under rebate of 12% per annum.
Record these transactions in the journals of A and B (6 Marks)

1999- May
Q.16 Shubham draws on Rajendra a bill for Rs. 45,000 on 1st June 1998 for 3 months .Rajendra accepts the bill and
sends it to Shubham who gets it discounted for Rs. 44,100.Shubham immediately remits Rs. 14,700 to
Rajendra. On the due date Shubham, being unable to remit the amount due accepts a bill for Rs. 63,000 for
three months which is discounted by Rajendra for Rs. 61,650 .Rajendra sends Rs. 11,100 to Shubham On the
due date Shubham becomes insolvent, his estate paying forty paise in the rupee. Give journal entries in the
books of Shubham and Rajendra (15 Marks)

2000 - May
Q.17 On 1st July, 1999 G drew a bill for Rs. 80,000 for 3 months of H for mutual accommodation, accepted the bill
of exchange.
G had purchased goods worth Rs. 81,000 from J on the same date. G endorsed H's accepatnce to J in full
settlement. On 1st September, 1999 J purchased goods worth Rs. 90,000 from H. J endorsed the bill of
exchange received from G to H and paid Rs. 9,000 in full settlement of the amount due to H.
On 1st October, 1999 H purchased goods worth Rs. 1,00,000 from G. He paid the amount due to G by cheque.
Give the necessary journal entries in the books of H ( 6 Marks)

2001 - May
Q.18 Record the following transactions in the journals of Ram and Hari. Ram sells goods for Rs. 1,00,000 to Hari
on 1st January, 2001 and on the same day draws a bill on Hari at three months for the amount. Hari accept it
 and returns it to Ram, who discounts it on 4th January, 2001 with his bank at 12%per annum. The acceptance
is dishnoured on due date and the bank pays Rs. 250 as noting charges.
(9 Marks)
2004 - Nov
Q.19 Anil draws a bill for Rs. 9,000 on Sanjay on 5th April, 2003 for 3 months, which Sanjay returns it to Anil
after accepting the same. Anil gets it discounted with the bank for Rs. 8,820 and remits one-third amount to
Sanjay.
On the due date Anil fails to remit the amount due to Sanjay, but he accepts a bill for Rs 12,600 for three
months, which Sanjay discounts it for Rs. 12,330 and remits Rs 2,220 to Anil before the maturity of the
renewed bill Anil becomes insolvent and only 50 % was realised from his estate in 15th October, 2003 .
Pass necessary Journal entries for the above transactions in the books of Anil. (9 Marks )

2006 Nov
Q.20 Mr. B accepted a bill for Rs. 10,000 drawn on him by Mr. A on 1st August, 2005 for 3 months. This was for
the amount which B owed to A. And on the same date Mr. A got the bill discounted at his bank for Rs.
9,800.On the due date, B approached A for renewal of the bill. Mr. A agreed on condition that Rs. 2,000 be
paid immediately along with interest on the remaining amount at 12% p. a for 3 months. These arrangements
were carried through. On 31st December, 2005 . B became insolvent and his estate paid 40%.
Give journal entries in the books of Mr. A

RTP QUESTIONS
MAY -2018
Q. 21 Mr. B accepted a bill for ` 10,000 drawn on him by Mr. A on 1st August, 2017 for 3 months. This was
for the amount which B owed to A. On the same date Mr. A got the bill discounted at his bank for `
9,800.On the due date, B approached A for renewal of the bill. Mr. A agreed on condition that
` 2,000 be paid immediately along with interest on the remaining amount at 12% p.a. for 3 months and
that for the remaining balance B should accept a new bill for 3 months. These arrangements were carried
through. On 31st December, 2017, B became insolvent and his estate paid 40%.
Prepare Journal Entries in the books of Mr. A

NOV -2018
Q.22 Prepare Journal entries for the following transactions in K. Katrak’s books.
(i) Katrak’s acceptance to Basu for ` 2,500 discharged by a cash payment of ` 1,000 and a new bill for
the balance plus ` 50 for interest.
(ii) G. Gupta’s acceptance for ` 4,000 which was endorsed by Katrak to M. Mehta was dishonoured.
Mehta paid ` 20 noting charges. Bill withdrawn against cheque.
(iii) D. Dalal retires a bill for ` 2,000 drawn on him by Katrak for ` 10 discount.
(iv) Katrak’s acceptance to Patel for ` 5,000 discharged by Patel Mody’s acceptance to
Katrak for a similar amount.

MAY-2019
Q.23 Rita owed `1,00,000 to Siriman. On 1st October, 2018, Rita accepted a bill drawn by Siriman for the
amount at 3 months. Siriman got the bill discounted with his bank for
`99,000 on 3rd October, 2018. Before the due date, Rita approached Siriman for renewal of the bill.
Siriman agreed on the conditions that `50,000 be paid immediately together with interest on the
 remaining amount at 12% per annum for 3 months and for the balance, Rita should accept a new bill at
three months. These arrangements were carried out. But afterwards, Rita became insolvent and 40% of the
amount could be recovered from his estate.
Pass journal entries (with narration) in the books of Siriman.

NOV-2019
Q.24 Mr. B accepted a bill for ` 10,000 drawn on him by Mr. A on 1st August, 2017 for 3 months. This was
for the amount which B owed to A. On the same date Mr. A got the bill discounted at his bank for `
9,800.
On the due date, B approached A for renewal of the bill. Mr. A agreed on condition that
` 2,000 be paid immediately along with interest on the remaining amount at 12% p.a. for 3 months and
that for the remaining balance B should accept a new bill for 3 months. These arrangements were carried
through. On 31st December, 2017, B became insolvent and his estate paid 40%.
You are required to prepare Journal Entries in the books of Mr. A

MAY-2020
Q.25 On 1st January 2018, Akshay draws two bills of exchange for ` 16,000 and `25,000.
The bill of exchange for ` 16,000 is for two months while the bill of exchange for ` 25,000 is for three
months. These bills are accepted by Vishal. On 4th March, 2018, Vishal requests Akshay to renew the
first bill with interest at 15% p.a. for a period of two months. Akshay agreed to this proposal. On 25th
March, 2018, Vishal retires the acceptance for ` 25,000, the interest rebate i.e. discount being ` 250.
Before the due date of the renewed bill, Vishal becomes insolvent and only 50 paisa in a rupee could be
recovered from his estate.
Show the Journal Entries (with narrations) in the books of Akshay.