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NCERT · Class 11 · Accountancy

Chapter 8: Bills of Exchange

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Numerical Answers for Class 11 Accountancy Chapter 8 – Bill of Exchange

23 questions
Q1Written answer

On Jan 01, 2016 Rao sold goods ₹ 10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books Rao and prepare of Rao’s account in the books of Reddy.

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The transactions are journalized below:

Books of Rao
Journal 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
2016
01 Jan Reddy Dr. 10,000
To Sales A/c 10,000
(Goods traded to Reddy)
01 Jan Cash A/c Dr. 5,000
To Reddy 5,000
(Cash received from Reddy)
01 Jan Bills Receivable A/c Dr. 5,000
To Reddy 5,000
(Bill received for 30 days accepted by Reddy)
03 Feb Cash A/c Dr. 5,000
To Bills Receivable A/c 5,000
(Reddy’s acceptance met on due date)
Books of Reddy
Rao’s Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
01 Jan Cash 5,000 2016
01 Jan Bills Receivable 5,000 01 Jan Purchases 10,000
10,000 10,000
Q2Written answer

On Jan 01, 2016, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.

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The necessary journal entries are as follows:

Books of Parvati
 Journal
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
2016
01 Jan Shankar Dr. 8,000
To Sales A/c 8,000
(Sold goods to Shankar)
01 Jan Bills Receivable A/c Dr. 8,000
To Shankar 8,000
(Shankar sent Promissory Note for

three months)
05 Apr Cash A/c Dr. 8,000
To Bills Receivable A/c 8,000
(Cash received for Promissory Note one day after the

Maturity date on account of holiday declared by Govt.)
Books of Shankar
Journal 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
2016
01 Jan Purchases A/c Dr. 8,000
To Parvati 8,000
(Goods purchased from Parvati)
01 Jan Parvati Dr. 8,000
To Bills Payable A/c 8,000
(Promissory note for three months sent to Parvati)
05 Apr Bills Payable A/c Dr. 8,000
To Cash A/c 8,000
(Cash paid on maturity of promissory note)
Q3Written answer

Vishal sold goods for ₹ 7,000 to Manju on Jan 05, 2016 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal’s draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank@12% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.

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The transactions are journalized as follows:

Books of Vishal 
Journal
Date Particulars L.F. Debit

Amount 

₹

 Credit 

Amount 

₹
2016
05 Jan Manju Dr. 7,000
To Sales A/c 7,000
(Good Manju)
05 Jan Bills Receivable A/c Dr. 7,000
To Manju 7,000
(Manju’s acceptance received for two months)
05 Jan Bank A/c Dr. 6,860
Discount A/c Dr. 140 7,000
To Bills Receivable A/c
(Bill Receivable discounted with the bank @ 12 % p.a. for two months)
Books of Manju 
Journal
Date Particulars L.F. Debit 

Amount

₹

 Credit

Amount

₹
2016
05 Jan Purchases A/c Dr. 7,000
To Vishal 7,000
(purchasing from Vishal)
05 Jan Vishal Dr. 7,000
To Bills Payable A/c 7,000
(Bill drawn by Vishal acknowledged)
08 Mar Bills Payable A/c Dr. 7,000
To Bank A/c 7,000
(Bill Payable Amount paid to bank on maturity)
Q4Written answer

On 01 Feb, 2016, John purchased goods for ₹ 15,000 from Jimmi. He immediately made a payment of ₹ 5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmi. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmi sent the same to his bank for collection. The bank duly presented the bill to John on the due date who met the bill. The bank informed the same to Jimmi. Prepare John’s account in the books of Jimmi and Jimmi account in the books of John.

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The entries are shown below:

Books of Jimmi
Journal
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
2016
01 Feb John Dr. 15,000
To Sales A/c 15,000
(Goods traded to John)
01 Feb Bank A/c Dr. 5,000
To John 5,000
(Cheque acknowledged for ₹ 5,000 from John)
01 Feb Bills Receivable A/c Dr. 10,000
To John 10,000
(Bill received from John for 40 days)
10 Mar Bill Sent for Collection A/c Dr. 10,000
To Bills Receivable A/c 10,000
(John’s approval sent to bank for collection)
15 Mar Bank A/c Dr. 10,000
To Bill Sent for Collection A/c 10,000
(John’s approval met on due date and bank

got the payment)
Ledger 

John’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2016 2016
01 Feb Sales 15,000 01 Feb Bank 5,000
01 Feb Bills Receivable 10,000
15,000 15,000
Books of John
Journal
Date Particulars L.F. Debit 

Amount 

₹

 Credit

Amount

₹
2016
01 Feb Purchases A/c Dr. 15,000
To Jimmi 15,000
(Goods purchased from Jimmi)
01 Feb Jimmi Dr. 5,000
To Bank A/c 5,000
(Cheque payment done to Jimmi)
01 Feb Jimmi Dr. 10,000
To Bills Payable A/c 10,000
(Bill drawn by Jimmi acknowledged for 40 days)
15 Mar Bills Payable A/c Dr. 10,000
To Bank A/c 10,000
(Payment of bill done on maturity to bank)
Ledger 

Jimmi’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2016 2016
01 Feb Bank 5,000 01 Feb Purchases 15,000
01 Feb Bills Payable 10,000
15,000 15,000
Q5Written answer

On Jan 15, 2015, Kartar Sold goods for ₹ 30,000 to Bhagwan and drew upon him three bills of exchanges of ₹ 10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his creditor Ratna and the third bill was discounted by him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.

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The solution is as follows:

Journal Entries in the Books of Kartar
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2015
15 Jan Bhagwan Dr. 30,000
To Sales A/c 30,000
( Goods traded to Bhagwan)
15 Jan Bills Receivable A/c Dr. 10,000
To Bhagwan A/C 10,000
(Three bills of ₹ 10,000 each, received from

Bhagwan)
15 Jan Ratna Dr. 10,000
To Bills Receivable A/c 10,000
(₹ 10,000 bill from Bhagwan endorsed to Ratna)
15 Jan Bank A/c Dr. 9,850
Discount A/c Dr. 150
To Bills Receivable A/c 10,000
(B/R discounted)
19 Feb Cash A/c Dr. 10,000
To Bills Receivable A/c 10,000
(First bill for one month paid by Bhagwan, on due date)
Bhagwan’s Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
15 Jan Sales A/c 30,000 15 Jan Bills Receivable A/c 30,000
30,000 30,000
Ratna’s Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
15 Jan Bills Receivable A/c 10,000 15 Jan Balance b/d 10,000
10,000 10,000
Bills Receivable Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
15 Jan Bhagwan 30,000 15 Jan Ratna 10,000
15 Jan Bank A/c 9,850
15 Jan Discount A/c 150
19 Feb Cash 10,000
30,000 30,000
Cash Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
19 Feb Bills Receivable 10,000 19 Feb Balance c/d 10,000
10,000 10,000
Bank’s Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
15 Jan Bills Receivable 9,850 15 Jan Balance c/d 9,850
9,850 9,850
Journal Entries in the Books of Bhagwan
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
2015
15 Jan Purchases A/c Dr. 30,000
To Kartar 30,000
(Good bought from Kartar on credit)
15 Jan Kartar Dr. 30,000
To Bills Payable A/c 30,000
(Three bills of ₹ 10,000 each drawn by Kartar–

Accepted and  returned them to Kartar)
19 Feb Bills Payable A/c Dr. 10,000
To Cash A/c 10,000
(First bill payment completed on due date)
19 Mar Bills Payable A/c Dr. 10,000
To Bank A/c 10,000
(Second bill payment completed on due date to Ratna)
19 Apr Bills Payable A/c Dr. 10,000
To Bank A/c 10,000
(Third bill payment completed on due date to bank)
Kartar’s Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
15 Jan Bills Payable A/c 30,000 15 Jan Purchases 30,000
30,000 30,000
Bills Payable Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
19 Feb Cash A/c 10,000 15 Jan Kartar 30,000
19 Mar Bank A/c 10,000
19 Apr Bank A/c 10,000
30,000 30,000
Cash Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
19 Feb Balance b/d 10,000 19 Feb Bills Payable A/c 10,000
10,000 10,000
Bank’s Account
Dr. Cr.
Date Particulars J.F. Amount

(₹)

 Date Particulars J.F. Amount

(₹)
2015 2015
15 Mar Balance b/d 20,000 19 Mar Bills Payable A/c 10,000
19 Apr Bills Payable A/c 10,000
20,000 20,000
Q6Written answer

On Jan. 01, 2016 Arun sold goods for ₹ 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and journalise the above transactions in the books of Arun and Sunil.

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The transactions are journalized as follows:

Journal Entries in the Books of Arun
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2016
01 Jan Sunil Dr. 30,000
To Sales A/c 30,000
(Goods traded to Sunil)
01 Jan Cash A/c Dr. 14,700
Discount Allowed A/c Dr. 300
To Sunil 15,000
(50% due from Sunil received and

2% Cash Discount allowed to Sunil)
01 Jan Bills Receivable A/c Dr. 15,000
To Sunil 15,000
(Promissory note established for 20 days from Sunil)
23 Jan Cash A/c Dr. 15,000
To Bills Receivable A/c 15,000
(Cash received from Sunil before

Maturity)
Journal Entries in the Book of Sunil
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Jan Purchases A/c Dr. 30,000
To Arun 30,000
(Goods purchased from Arun)
01 Jan Arun Dr. 15,000
To Cash A/c 14,700
To Discount Received A/c 300
(50% amount due to Arun paid by cheque and 2%  discount allowed by Arun)
01 Jan Arun Dr. 15,000
To Bills Payable A/c 15,000
(Promissory note issued in favour of Arun for twenty days)
23 Jan Bills Payable A/c Dr. 15,000
To Cash A/c 15,000
(Promissory note fulfilled one day before the maturity day)
Q7Written answer

Darshan sold goods for ₹ 40,000 to Varun on 8.1.2016 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.

· When the bill was retained by Darshan till the date of its maturity.

· When Darshan immediately discounted the bill @ 6% p.a. with his bank.

· When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.

· When three days before its maturity, the bill was sent by Darshan to his bank for collection.

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Worked solution

The entries are shown below:

(i)

Books of Darshan
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2016
08 Jan Varun Dr. 40,000
To Sales A/c 40,000
(Goods traded to Varun)
08 Jan Bills Receivable A/c Dr. 40,000
To Varun 40,000
(Bill of Exchange duly accepted and returned by Varun)
11 Mar Cash A/c Dr. 40,000
To Bills Receivable A/c 40,000
(Payment for B/R received for B/R)
Books of Varun
Date Particulars L.F Debit ₹ Credit₹
2016
08 Jan Purchases A/c Dr. 40,000
To Darshan 40,000
(Goods purchased from Darshan)
08 Jan Darshan Dr. 40,000
To Bills Payable A/c 40,000
(Bill of two months accepted for Darshan)
11 Mar Bills Payable A/c Dr. 40,000
To Cash A/c 40,000
(Varun cleared his payment on the due date)

(ii)

Books of Darshan
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2016
08 Jan Varun Dr. 40,000
To Sales A/c 40,000
(Goods traded to Varun)
08 Jan Bills Receivable A/c Dr. 40,000
To Varun 40,000
(B/R received from Varun for two months)
08 Jan Bank A/c Dr. 39,600
Discount A/c Dr. 400
To Bills Receivable A/c 40,000
(B/R discounted from bank @ 6 p.a.)
Books of Varun
Date Particulars L.F. Debit ₹ Credit₹
2016
08 Jan Purchases A/c Dr. 40,000
To Darshan 40,000
(Goods purchased from Darshan)
08 Jan Darshan Dr. 40,000
To Bills Payable A/c 40,000
(Bill of two months accepted for Darshan)
11 Mar Bills Payable A/c Dr. 40,000
To Bank A/c 40,000
(Varun cleared his payment on the

due date)

(iii)

Books of Darshan
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2016
08 Jan Varun Dr. 40,000
To Sales A/c 40,000
(Goods traded to Varun)
08 Jan Bills Receivable A/c Dr. 40,000
To Varun A/c 40,000
(Varun’s approval received for two months)
08 Jan Suresh A/c Dr. 40,000
To Bills Receivable A/c 40,000
(Varun’s approval endorsed in favour of Suresh)
Books of Varun
Date Particulars L.F Debit ₹ Credit₹
2016
08 Jan Purchases A/c Dr. 40,000
To Darshan 40,000
(Goods purchased from Darshan)
08 Jan Darshan Dr. 40,000
To Bills Payable A/c 40,000
(Bill drawn by Darshan accepted for two months)
11 Mar Bills Payable A/c Dr. 40,000
To Cash A/c 40,000
(Bill paid to the holder of bill)

(iv)

Books of Darshan
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2016
08 Jan Varun A/c Dr. 40,000
To Sales A/c 40,000
(Goods traded to Varun)
08 Jan Bills Receivable A/c Dr. 40,000
To Varun A/c 40,000
(Bill of Exchange duly accepted and returned by Varun)
08 Mar Bill Sent for Collection A/c Dr. 40,000
To Bills Receivable A/c 40,000
(Bill of Exchange sent for collection to bank)
11 Mar Bank A/c Dr. 40,000
To Bill Sent for Collection A/c 40,000
(Bill of Exchange matured and duly collected on date of maturity)
Books of Varun
Date Particulars L.F. Debit 

Amount 

₹

 Credit 

Amount 

₹
2016
08 Jan Purchases A/c Dr. 40,000
To Darshan 40,000
(Goods purchased from Darshan)
08 Jan Darshan Dr. 40,000
To Bills Payable A/c 40,000
(Bill of Exchange duly accepted and returned to Darshan)
11 Mar Bills Payable A/c Dr. 40,000
To Bank A/c 40,000
(Bill of Exchange matured and duly cleared on date of maturity)
Q8Written answer

Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.

Date Amount

₹

21 Dec, 2016 1,000

26 Dec, 2016 1,200

Dec.18, 2016 2,000

31 Dec, 2016 5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.

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The necessary journal entries are as follows:

Journal Entries in the Books of Bansal Traders
Date Particulars L.F. Debit ₹ Credit₹
2016
21 Dec Mohan Traders Dr. 900
To Sales A/c 900
(Goods traded to Mohan Traders list price ₹

1,000 at 10% trade discount)
2016
21 Dec Bills Receivable A/c Dr. 900
To Mohan Traders 900
(Promissory note established from Mohan Traders

payable after 30 days)
2016
26 Dec Mohan Traders Dr. 1,080
To Sales A/c 1,080
(Goods traded to Mohan Traders list price ₹

1,200 at 10% trade discount)
2016
26 Dec Bills Receivable A/c Dr. 1,080
To Mohan Traders 1,080
(Promissory note  received from Mohan Traders)
2016
26 Dec Bank A/c Dr. 1,071
Discount A/c Dr. 9
To Bills Receivable A/c 1,080
(Promissory note discounted from the Bank)
2016
28 Dec Mohan Traders A/c Dr. 1,800
To Sales A/c 1,800
(Goods traded to Mohan Traders list price ₹

2,000 at 10% trade discount)
2016
28 Dec Bills Receivable A/c Dr. 1,800
To Mohan Traders A/c 1,800
(Promissory note established from Mohan Traders)
2016
28 Dec Dream Soaps A/c Dr. 1,900
To Bills Receivable A/c 1,800
To Discount Received A/c 100
(Promissory note of ₹ 1,800 sent to Dream

Soap in full settlement of amount due to him)
2016
31 Dec Mohan Traders Dr. 4,500
To Sales A/c 4,500
(Goods traded to Mohan trades list price ₹

5,000 at 10% trade discount)
2016
31 Dec Bills Receivable A/c Dr. 4,500
To Mohan Traders 4,500
(Promissory note established from Mohan Traders for 30 days)
2017
23 Jan Cash A/c Dr. 900
To Bills Receivable A/c 900
(Promissory note issued on Dec. 21,

2005 was met on maturity)
2017
25 Jan Bill Sent for collection A/c Dr. 4,500
To Bills Receivable A/c 4,500
(Promissory note issued on Dec. 31, 2005

sent for collection to bank)
2017
02 Feb Bank A/c Dr. 4,500
To Bill Sent for Collection A/c 4,500
(Bank got payment of bill sent for collection

on due date)
In the books of Bansal Traders

Mohan Trader’s Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2016 2016
21 Dec Sales 900 21 Dec Bills Receivable 900
26 Dec Sales 1,080 26 Dec Bills Receivable 1,080
28 Dec Sales 1,800 28 Dec Bills Receivable 1,800
31 Dec Sales 4,500 31 Dec Bills Receivable 4,500
8,280 8,280
Journal Entries in the Books of Mohan Trader’s
Date Particulars L.F. Debit ₹ Credit₹
2016
21 Dec Purchases A/c Dr. 900
To Bansal Traders 900
(Goods purchased from Bansal Trader’s list price ₹

1,000 at 10% trade discount)
2016
21 Dec Bansal Trader Dr. 900
To Bills Payable A/c 900
(Promissory note issued Bansal Traders for ₹ 900)
2016
26 Dec Purchases A/c Dr. 1,080
To Bansal Traders 1,080
(Goods purchased from Bansal Traders list price ₹

1,200 at 10% Trade discount)
2016
26 Dec Bansal Traders Dr. 1,080
To Bills Payable A/c 1,080
(Promissory note established from Bansal Traders)
2016
28 Dec Purchases A/c Dr. 1,800
To Bansal Traders 1,800
(Goods purchased from Bansal Traders list price ₹

2,000 at 10% trade discount)
2016
28 Dec Bansal Traders Dr. 1,800
To Bills Payable A/c 1,800
(Promissory note issued to Bansal Traders)
2016
31 Dec Purchases A/c Dr. 4,500
To Bansal Traders 4,500
(Goods purchased from Bansal Traders of list price ₹

5,000 at 10% trade discount)
2016
31 Dec Bansal Traders Dr. 4,500
To Bills Payable A/c 4,500
(Promissory note issued to Bansal Traders)
2017
23 Jan Bills Payable A/c Dr. 900
To Cash A/c 900
(The first promissory note discharged on its due date)
2017
28 Jan Bills Payable A/c Dr. 1,080
To Bank A/c 1,080
(The second promissory note discharged on its due

date)
2017
30 Jan Bills Payable A/c Dr. 1,800
To Cash A/c 1,800
(The third promissory discharged by paying

₹1,800 to Dream Soaps)
2017
02 Feb Bills Payable A/c Dr. 4,500
To Bank A/c 4,500
(The fourth promissory note discharged by paying ₹ 4,500 to Bank)
In the books of Mohan Traders

Bansal Trader’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2016 2016
21 Dec Bills Payable 900 21 Dec Purchases 900
26 Dec Bills Payable 1,080 26 Dec Purchases 1,080
28 Dec Bills Payable 1,800 28 Dec Purchases 1,800
31 Dec Bills Payable 4,500 31 Dec Purchases 4,500
8,280 8,280
Q9Written answer

Narayanan purchased goods for ₹ 25,000 from Ravindran on Feb. 01, 2016. Ravindran drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravindran and Narayanan in following cases:

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  • When the bill was retained by Ravindran with him till the date of its maturity.
  • When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.
  • When the bill was endorsed to his creditor Ganeshan.
  • When the bill was sent by Ravindran to his bank for collection a few days before it maturity.

Necessary journal entries are as follows:

(i) : When the bill was retained by Ravindran with him till the date of its maturity

Books of Ravindran
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Narayanan Dr. 25,000
To Sales A/c 25,000
(Goods traded to Narayanan)
01 Feb Bills Receivable A/c Dr. 25,000
To Narayanan 25,000
(Narayanan’s acceptance received for 30 days)
05 Mar Narayanan Dr. 25,000
To Bills Receivable A/c 25,000
(Narayanan failed to meet his

acceptance and bill dishonoured)
Books of Narayanan
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Purchases A/c Dr. 25,000
To Ravindran 25,000
(Goods purchased from Ravindran)
01 Feb Ravindran Dr. 25,000
To Bills Payable A/c 25,000
(Ravindran’s bill accepted)
05 Mar Bills Payable A/c Dr. 25,000
To Ravindran A/c 25,000
(Bill dishonoured on maturity)

(ii) : When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.

Books of Ravindran
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Narayanan Dr. 25,000
To Sales A/c 25,000
(Goods traded to Narayanan)
01 Feb Bills Receivable A/c Dr. 25,000
To Narayanan 25,000
(Narayanan’s acceptance received)
01 Feb Bank A/c Dr. 24,875
Discount A/c Dr. 125
To Bills Receivable A/c 25,000
(Narayanan’s acceptance got discounted with

bank @ 6% p.a.)
05 Mar Narayanan 25,000
To Bank A/c 25,000
(Narayanan’s acceptance dishonoured)
Books of Narayanan
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Purchases A/c Dr. 25,000
To Ravindran 25,000
(Goods purchased from Ravindran)
01 Feb Ravindran Dr. 25,000
To Bills Payable A/c 25,000
(Ravindran’s bill accepted)
05 Mar Bills Payable A/c Dr. 25,000
To Ravindran 25,000
(Bill dishonoured on maturity)

(iii) : When the bill was endorsed to his creditor Ganeshan

Books of Ravindran
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Narayanan Dr. 25,000
To Sales A/c 25,000
(Goods traded to Narayanan)
01 Feb Bills Receivable A/c Dr. 25,000
To Narayanan 25,000
(Narayanan’s acceptance received)
01 Feb Ganeshan Dr. 25,000
To Bills Receivable A/c 25,000
(Narayanan’s acceptance endorsed in favour

of Ganeshan)
05 Mar Narayanan Dr.
To Ganeshan A/c 25,000
(Narayanan’s acceptance dishonoured)
Books of Narayanan
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Purchases A/c Dr. 25,000
To Ravindran 25,000
(Goods purchased from Ravindran)
01 Feb Ravindran Dr. 25,000
To Bills Payable A/c 25,000
(Ravindran’s bill accepted)
05 Mar Bills Payable A/c Dr. 25,000
To Ravindran 25,000
(Ravindran’s bill was dishonoured on due date)

(iv): When the bill was sent by Ravindran to his bank for collection a few days before it maturity

Books of Ravindran
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Narayanan Dr. 25,000
To Sales A/c 25,000
(Goods traded to Narayanan)
01 Feb Bills Receivable A/c Dr. 25,000
To Narayanan 25,000
(Narayanan’s acceptance received)
01 Feb Bill Sent for Collection A/c Dr. 25,000
To Bills Receivable A/c 25,000
(Bill sent to bank for collection)
05 Mar Narayanan Dr. 25,000
To Bill Sent for Collection A/c 25,000
(Bill got dishonoured)
Books of Narayanan
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Feb Purchases A/c Dr. 25,000
To Ravindran 25,000
(Bought goods from Ravindran)
01 Feb Ravindran Dr. 25,000
To Bills Payable A/c 25,000
(Ravindran’s bill accepted)
05 Mar Bills Payable A/c Dr. 25,000
To Ravindran 25,000
(Ravindran’s bill dishonoured)
Q10Written answer

Ravi sold goods for ₹ 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for ₹ 5,000 payable after one month. The second bill was for ₹ 10,000 payable after 40 days; the third bill was for ₹ 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of ₹ 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

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Worked solution

The necessary journal entries are shown below:

Books of Ravi
Journal
Date Particulars L.F. Debit

₹

 Credit₹
2016
13 Feb Sudershan Dr. 40,000
To Sales A/c 40,000
(Goods traded to Sudershan)
13 Feb Bills Receivable A/c Dr. 40,000
To Sudershan 40,000
(Four bills from Sudershan received: the first for

₹5,000, the second bill for ₹ 10,000, the third bill for

₹ 12,000 and the fourth bill for ₹ 13)
13 Feb Bank A/c Dr. 4,975
Discount A/c Dr. 25
To Bills Receivable A/c 5,000
(The first bill discounted with bank at 6% p.a.)
13 Feb Mustaq Dr. 10,200
To Bills Receivable A/c 10,000
To Discount Received A/c 200
(The second bill endorsed to Mustaq in full settlement

of amount due to him)
03 Mar Bill Sent for Collection A/c Dr. 13,000
To Bills Receivable A/c 13,000
(The fourth bill sent to bank for collection)
07 Mar Sudershan Dr. 13,000
To Bill Sent for Collection A/c 13,000
(The fourth bill dishonoured on due date)
07 Mar Sudershan Dr. 81
To Interest A/c 81
(Interest due on the fourth bill ₹ 13,000 for 19

days at 12% p.a,)
10 Mar Cash A/c Dr. 13,081
To Sudershan 13,081
(Cash received from Sudershan)
16 Mar Sudershan Dr. 5,000
To Bank A/c 5,000
(The first bill dishonoured)
16 Mar Sudershan Dr. 50
To Interest A/c 50
(Interest due on amount ₹ 5,000 at 12%

for one month)
19 Mar Cash A/c Dr. 5,050
To Sudershan A/c 5,050
(Sudershan paid the amount due on account

dishonoured of the first bill plus interest)
28 Mar Sudershan Dr. 10,000
Discount Received A/c Dr. 200
To Mustaq 10,200
(The second bill dishonoured, which had endorsed

in favour of Mustaq)
28 Mar Sudershan Dr. 132
To Interest A/c 132
(Interest charged at 12% on the amount due on account

of dishonour of the second bill ₹ 10,000)
01 Apr Cash A/c Dr. 10,132
To Sudershan A/c 10,132
(Received cash from Sudershan for the second bill

along with interest)
May16 Sudershan Dr. 12,000
To Bills Receivable A/c 12,000
(The third bill dishonoured on due date)
May16 Sudershan Dr. 360
To Interest A/c 360
(Interest at 12% for 3 months charged on the amount due

on account of dishonouring the third bill ₹ 12,000)
May19 Cash A/c Dr. 12,360
To Sudershan 12,360
(Cash received from Sudershan for the third bill along with interest 12% p.a.)
Ledger

Sudershan’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2016 2016
13 Feb Sales 40,000 13 Feb Bills Receivable 40,000
07 Mar Bill sent for Collection 13,000 10 Mar Cash 13,081
07 Mar Interest 81 19 Mar Cash 5,050
16 Mar Bank 5,000 01 Apr Cash 10,132
16 Mar Interest 50 May19 Cash 12,360
28 Mar Mustaq 10,000
28 Mar Interest 132
16 May Bills Receivable 12,000
16 May Interest 360
80,623 80,623
Mustaq’s Account
Dr. Cr.
Date Particulars J.F. Amount 

₹

 Date Particulars J.F. Amount 

₹
2016 2016
13 Feb B/R 10,000 28 Mar Sudershan 10,000
13 Feb Discount Received 200 28 Mar Discount Received 200
10,200 10,200
Books of Sudershan
Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
13 Feb Purchases A/c Dr. 40,000
To Ravi 40,000
(Goods purchased from Ravi)
13 Feb Ravi Dr. 40,000
To Bills Payable A/c 40,000
(Four bills drawn by Ravi accepted: the first bill for

₹ 5,000 payable after one month, the second for

₹ 10,000 payable after 40 days, the third for ₹ 12,000

payable after 3 months and the fourth for ₹ 13,000

payable after 19 days)
07 Mar Bills Payable A/c Dr. 13,000
To Ravi 13,000
(The fourth bill dishonoured)
07 Mar Interest A/c Dr. 81
To Ravi 81
(Interest charged for the amount of fourth bill

at 12% p.a.)
10 Mar Ravi Dr. 13,081
To Cash A/c 13,081
(Cash paid to Ravi for amount due on account of

dishonour of the fourth bill along with interest

at 12% p.a. for 19 days)
16 Mar Bills Payable A/c Dr. 5,000
To Ravi 5,000
(The first bill dishonoured)
16 Mar Interest A/c Dr. 50
To Ravi 50
(Interest charged at 12% p.a. on the first bill for one month)
19 Mar Ravi Dr. 5,050
To Cash A/c 5,050
(Cash paid to Ravi for amount due on account of

dishonour of the first bill along with interest

at 12% p.a. for one month)
28 Mar Bills Payable A/c Dr. 10,000
To Ravi 10,000
(The second bill dishonoured)
28 Mar Interest A/c Dr. 132
To Ravi 132
(Interest charged at 12% p.a. for 40 days on the second bill)
01 Apr Ravi Dr. 10,132
To Cash A/c 10,132
(Cash paid to Ravi for amount due on account of

dishonour of the second bill along with interest

at 12% p.a. for 40 days)
16 May Bills Payable A/c Dr. 12,000
To Ravi 12,000
(The third bill dishonoured)
16 Mar Interest A/c Dr. 360
To Ravi 360
(Interest charged at 12% p.a. for 3 months on third bill)
19 May Ravi Dr. 12,360
To Cash A/c 12,360
(Cash paid to Ravi for amount due on account of

dishonour of the third bill along with interest

at 12% p.a. for 3 months)