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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
Q11Written answer

On Jan 01, 2016 Neha sold goods for ₹ 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.

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The necessary journal entries are shown below:

Books of Neha

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Jan Muskan Dr. 20,000
To Sales A/c 20,000
(Goods traded to Muskan)
01 Jan Bills Receivable A/c Dr. 20,000
To Muskan 20,000
(Muskan’s acceptance received)
04 Feb Cash A/c Dr. 19,800
Rebate on bill A/c Dr. 200
To Bills Receivable A/c 20,000
(Muskan’s acceptance retired one month before

maturity and allowed rebate at 12% p.a.)

  

Books of Muskan

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
01 Jan Purchases A/c Dr. 20,000
To Neha 20,000
(Goods purchased from Neha)
01 Jan Neha Dr. 20,000
To Bills Payable A/c 20,000
(Bill drawn by Neha payable after 2 months

accepted)
04 Feb Bills Payable A/c Dr. 20,000
To Cash A/c 19,800
To Rebate on Bills A/c 200
(Bill paid one month before maturity and received

Rebate at 12% p.a.)
Q12Written answer

On Jan 15, 2016 Raghu sold goods worth ₹ 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for ₹ 5,000 payable after one month, the second bill was for ₹ 20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his creditor Dewan in full settlement of a debt of ₹ 5,200. The second bill was discounted by Raghu @ 6 % p.a. and the third bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid ₹ 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonoured by Devendra and the bank paid ₹ 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest ₹ 1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra’s account in Raghu’s books and Raghu’s account in Devendra’s account.

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The journal entries are as follows:

Books of Raghu

Journal
Date   Particulars   L.F. Debit ₹ Credit₹
2016
15 Jan Devendra Dr. 35,000
To Sales A/c 35,000
(Goods traded to Devendra)
15 Jan Bills Receivable A/c Dr. 35,000
To Devendra 35,000
(Three bills received from Devendra–the first bill ₹ 5,000,

the second bill ₹ 20,000, the third bill ₹ 10,000)
15 Jan Dewan Dr. 5,200
To Bills Receivable A/c 5,000
To Discount Received A/c 200
(The first bill endorsed to Dewan in full settlement

of amount due to him)
15 Jan Bank A/c Dr. 19,700
Discount A/c Dr. 300
To Bills Receivable A/c 20,000
(The second bill discounted with bank at 6% p.a.)
18 Apr Devendra Dr. 20,030
To Bank A/c 20,030
(The second bill dishonoured and bank paid

₹ 30 for noting charges)
14 May Bill Sent for Collection A/c Dr. 10,000
To Bills Receivable A/c 10,000
(The third bill sent to bank for collection)
18 May Devendra Dr. 10,200
To Bill sent for collection A/c 10,000
To Bank A/c 200
(The third bill dishonoured and bank paid ₹ 200

as noting charges)
23 May Devendra Dr. 1,000
To Interest A/c 1,000
(Interest due to Devendra on account of bills

dishonoured)
23 May Cash A/c Dr. 31,230
To Devendra 31,230
(Cash received from Devendra)
Ledger 

Devendra’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2016 2016
15 Jan Sales 35,000 15 Jan Bills Receivable 35,000
18 Apr Bank 20,030 23 May Cash 31,230
18 May Bills Sent for Collection 10,000
18 May Bank 200
23 May Interest 1,000
66,230 66,230
Books of Devendra

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Purchases A/c Dr. 35,000
To Raghu 35,000
(Goods purchased from Raghu)
15 Jan Raghu Dr. 35,000
To Bills Payable A/c 35,000
(Three bills drawn by Raghu accepted: the first bill for

₹ 5,000 payable after one month, the second for ₹ 20,000

payable after 3 months and the third for ₹ 10,000

payable after 4 months)
18 Feb Bills Payable A/c Dr. 5,000
To Cash 5,000
(The first bill discharged on the due date)
18 Apr Bills Payable A/c Dr. 20,000
Noting Charges A/c Dr. 30
To Raghu 20,030
(The second bill dishonoured and Noting Charges

₹ 30)
18 May Bills Payable A/c Dr. 10,000
Noting Charges A/c Dr. 200
To Raghu 10,200
(The third bill dishonoured and Noting Charges ₹ 200)
23 May Interest A/c Dr. 1,000
To Raghu 1,000
(Interest charged ₹ 1,000 on account of

bills dishonoured)
23 May Cash A/c Dr. 31,230
To Bank Loan A/c 31,230
(Bank loan taken for settling Raghu’s account)
23 May Raghu Dr. 31,230
To Cash A/c 31,230
(Cash paid to Raghu)
Ledger

Raghu’s Account
Dr. Cr.
Date Particulars J.F. Amount 

₹

 Date Particulars J.F. Amount 

₹
2016 2016
15 Jan Bills Payable 35,000 15 Jan Purchases 35,000
23 May Cash 31,230 18 Apr Bills Payable 20,000
18 Apr Noting Charges 30
18 May Bills Payable 10,000
18 May Noting Charges 200
18 May Interest 1,000
66,230 66,230
Books of Dewan

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Bills Receivable A/c Dr. 5,000
Discount Allowed A/c Dr. 200
To Raghu  5,200
(Bill Receivable received from Raghu for one month and

allowed him discount of ₹ 200)
18 Feb Cash A/c Dr. 5,000
To Bills Receivable A/c 5,000
(Bill met on maturity)
Q13Written answer

Vimal purchased goods ₹ 25,000 from Kamal on Jan 15, 2016 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill. Record the necessary journal entries in the books of Kamal and Vimal when.

•    The bill was retained by Kamal till the date of its maturity.

•    The bill was immediately discounted by Kamal with his bank @ 6% p.a.

•    The bill was endorsed by Kamal in favour of his creditor Sharad.

•    Five days before its maturity the bill was sent by Kamal to his bank for collection.

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The necessary journal entries are shown below:

(i) : The bill was retained by Kamal till the date of its maturity

Books of Kamal

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Vimal Dr. 25,000
To Sales A/c 25,000
(Goods traded to Vimal)
15 Jan Bills Receivable A/c Dr. 25,000
To Vimal 25,000
(Vimal’s acceptance received)
18 Mar Vimal Dr. 25,000
To Bills Receivable A/c 25,000
(Vimal acceptance dishonoured)
Books of Vimal

Journal
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
2016
15 Jan Purchases A/c Dr. 25,000
To Kamal 25,000
(Goods purchased from Kamal)
15 Jan Kamal Dr. 25,000
To Bills Payable A/c 25,000
(Bill drawn by Kamal accepted)
18 Mar Bills Payable A/c Dr. 25,000
To Kamal 25,000
(Bill drawn by Kamal dishonoured)

(ii) : The bill was immediately discounted by Kamal with his bank @ 6% p.a.

Books of Kamal

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Vimal Dr. 25,000
To Sales A/c 25,000
(Goods traded to Vimal)
15 Jan Bills Receivable A/c Dr. 25,000
To Vimal 25,000
(Vimal’s acceptance received)
15 Jan Bank A/c Dr. 24,750
Discount A/c Dr. 250
To Bills Receivable A/c 25,000
(Vimal’s acceptance discounted at 6% p.a. with

bank)
18 Mar Vimal Dr. 25,000
To Bank A/c 25,000
(Vimal’s acceptance dishonoured)
Books of Vimal

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Purchases A/c Dr. 25,000
To Kamal 25,000
(Goods purchased from Kamal)
15 Jan Kamal Dr. 25,000
To Bills Payable A/c 25,000
(Bill drawn by Kamal accepted)
18 Mar Bills Payable A/c Dr. 25,000
To Kamal 25,000
(Bill drawn by Kamal dishonoured)

Case (iii) : The bill was endorsed by Kamal in favour of his creditor Sharad

Books of Kamal

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Vimal Dr. 25,000
To Sales A/c 25,000
(Goods traded to Vimal)
15 Jan Bills Receivable A/c Dr. 25,000
To Vimal 25,000
(Vimal’s acceptance received)
15 Jan Sharad Dr. 25,000
To Bills Receivable A/c 25,000
(Vimal’s acceptance endorsed to Sharad)
18 Mar Vimal Dr. 25,000
To Sharad 25,000
(Vimal’s acceptance endorsed to Kamal dishonoured)
Books of Vimal

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Purchases A/c Dr. 25,000
To Kamal 25,000
(Goods purchased from Kamal)
15 Jan Kamal Dr. 25,000
To Bills Payable A/c 25,000
(Bill drawn by Kamal accepted)
18 Mar Bills Payable A/c Dr. 25,000
To Kamal 25,000
(Bill drawn by Kamal dishonoured)

Case (IV): Five days before its maturity the bill was sent by Kamal to his bank for collection

Books of Kamal

Journal
Date Particulars L.F. Debit ₹ Credit₹
2016
15 Jan Vimal Dr. 25,000
To Sales A/c 25,000
(Goods traded to Vimal)
15 Jan Bills Receivable A/c Dr. 25,000
To Vimal 25,000
(Vimal’s acceptance received, payable after two months)
Mar.13 Bill Sent for Collection A/c Dr. 25,000
To Bills Receivable A/c 25,000
(Vimal’s acceptance sent to bank for collection)
18 Mar Vimal Dr. 25,000
To Bill Sent for Collection 25,000
(Vimal’s acceptance dishonoured)
Books of Vimal

Journal
Date Particulars L.F. Debit ₹ Credit₹
Case (iii)
2016
15 Jan Purchases A/c Dr. 25,000
To Kamal 25,000
(Goods purchased from Kamal)
15 Jan Kamal Dr. 25,000
To Bills Payable A/c 25,000
(Bill drawn by Kamal accepted)
18 Mar Bills Payable A/c Dr. 25,000
To Kamal 25,000
(Bill drawn by Kamal dishonoured)
Q14Written answer

Abdula sold goods to Tahir on Jan 17, 2017 for ₹ 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid ₹ 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of ₹ 18,700 including interest and noting charges. Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.

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The necessary journal entries are shown below:

Books of Abdula

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
17 Jan Tahir Dr. 18,000
To Sales A/c 18,000
(Goods traded to Tahir)
17 Jan Bills Receivable A/c Dr. 18,000
To Tahir 18,000
(Tahir’s acceptance received)
06 Mar Tahir Dr. 18,040
To Bills Receivable A/c 18,000
To Cash 40
(Tahir’s acceptance dishonoured and ₹ 40 paid as

noting charges)
06 Mar Tahir Dr. 660
To Interest A/c 660
(Interest charged from Tahir on account of bill

dishonoured)
12 Mar Cash A/c Dr. 18,700
To Tahir 18,700
(Tahir cleared his account by paying cash)
Ledger 

Tahir’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
17 Jan Sales 18,000 17 Jan Bills Receivable 18,000
06 Mar Bills Receivable 18,000 11 Mar Cash 18,700
06 Mar Cash 40
06 Mar Interest 660
36,700 36,700
Books of Tahir

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
17 Jan Purchases A/c Dr. 18,000
To Abdula 18,000
(Goods purchased from Abdula)
17 Jan Abdula Dr. 18,000
To Bills Payable A/c 18,000
(Bill drawn by Abdula accepted, payable after 15 days)
06 Mar Bills Payable A/c Dr. 18,000
Noting Charges A/c Dr. 40
To Abdula 18,040
(Abula’s bill dishonoured)
07 Mar Interest A/c Dr. 660
To Abdula 660
(Interest charged on account of bill dishonoured)
11 Mar Abdula Dr. 18,700
To Cash A/c 18,700
(Cash paid to Abdula)
Ledger

Abdula’sAccount
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
17 Jan Bills Payable 18,000 17 Jan Purchases 18,000
11 Mar Cash 18,700 06 Mar Bills Payable 18,000
06 Mar Noting Charges 40
06 Mar Interest 660
36,700 36,700
Q15Written answer

Asha sold goods worth ₹ 19,000 to Nisha on March 02, 2017. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.

Record the necessary journal entries in the books of Asha and Nisha.

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The necessary journal entries are presented below

Books of Asha

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
02 Mar Nisha Dr. 19,000
To Sales A/c 19,000
(Goods traded to Nisha)
02 Mar Cash A/c Dr. 4,000
Bills Receivable A/c Dr. 15,000
To Nisha 19,000
(Cash and Nisha’s acceptance received)
02 Mar Bank A/c Dr. 14,635
Discount A/c Dr. 375
To Bills Receivable A/c 15,000
(Nisha’s acceptance discounted with bank at 10% p.a.)
Note: In this question rate of discount is not 

given, the rate of discount (10% p.a.) has been

 assumed).
05 Jun Nisha Dr. 15,030
To Bank A/c 15,030
(Nisha’s acceptance dishonoured and bank

paid ₹ 30 as noting charges)
Books of Nisha

Journal
Date Particulars L.F. Debit 

₹

 Credit₹
2017
02 Mar Purchases A/c Dr. 19,000
To Asha 19,000
(Goods purchased from Asha)
02 Mar Asha Dr. 19,000
To Bills Payable A/c 15,000
To Cash A/c 4,000
(Asha’s bill accepted payable after three month and

₹ 4,000 paid in cash)
Jun.05 Bills Payable A/c Dr. 15,000
Noting Charges A/c Dr. 30
To Asha 15,030
(Asha’s bill dishonoured)
Q16Written answer

On Feb. 02, 2017, Verma purchased from Sharma goods for ₹ 17,500. Verma paid ₹ 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.

Gupta for the full settlement of a debt of ₹ 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹ 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹ 15,500 which includes noting charges and interest. Verma settled Sharma’s claim by cheque for the same amount.

Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma’s and Gupta’s accounts in the books of Sharma. Sharma’s account in the books of Verma. And also Sharma’s account in the books of Gupta.

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The necessary journal entries are given below:

Books of Sharma

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
02 Feb Verma Dr. 17,500
To Sales A/c 17,500
(Goods traded to Verma)
02 Feb Cash A/c Dr. 2,500
Bills Receivable A/c Dr. 15,000
To Verma 17,500
(Cash ₹ 2,500 and Promissory Note ₹ 15,000 received

from Verma for 60 days)
02 Feb Gupta A/c Dr. 15,400
To Bills Receivable A/c 15,000
To Discount Received A/c 400
(Promissory Note endorsed to Gupta in full settlement

of amount due to him)
05 Apr Discount Received A/c Dr. 400
Verma Dr. 15,050
To Gupta 15,450
(Promissory Note issued by Verma dishonoured

and Gupta paid ₹ 50 as noting charges)
Note: In this question ₹ 5,000 is given as noting charges,

there is mistake. Here ₹ 50 has been taken as noting

charges instead of ₹ 5,000).
06 Apr Interest A/c Dr. 50
To Gupta 50
(Interest of ₹ 50 debited to Gupta, on account of

dishonour of Promissory Note)
06 Apr Gupta Dr. 15,500
To Bank A/c 15,500
(Gupta’s A/c settled)
06 Apr Bank A/c Dr. 15,050
To Verma 15,050
(Cheque received from Verma for the amount due from him)
Ledger

Verma’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
02 Feb Sales 17,500 02 Feb Cash 2,500
06 Apr Gupta 15,050 02 Feb Bills Receivable 15,000
06 Apr Bank 15,050
32,550 32,550
Gupta’s Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2017 2017
02 Feb B/R 15,000 01 Apr Balance b/d 15,400
02 Feb Discount Received 400 06 Apr Verma 15,050
02 Feb Bank 15,500 06 Apr Discount Reserved 400
06 Apr Interest 50
30,900 30,900
Books of Verma

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
02 Feb Purchases A/c Dr. 17,500
To Sharma 17,500
(Goods purchased from Sharma)
02 Feb Sharma Dr. 17,500
To Bills Payable A/c 15,000
To Cash A/c 2,500
(Cash ₹ 2,500 paid and Promissory Note made for

the balance)
06 Apr Bills Payable A/c Dr. 15,000
Noting Charges A/c Dr. 50
To Sharma 15,050
(Promissory Note dishonoured on maturity)
06 Apr Sharma Dr. 15,050
To Bank A/c 15,050
(Payment made to Sharma through cheque)
Ledger

 Sharma’s Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2017 2017
02 Feb Cash 2,500 02 Feb Purchases 17,500
02 Feb Bills Payable 15,000 06 Apr Bills Payable 15,000
06 Apr Bank 50 06 Apr Noting Charges 50
30,900 30,900
Books of Gupta

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
02 Feb Bills Receivable A/c Dr. 15,000
Discount Allowed A/c Dr. 400
To Sharma 15,400
(Promissory Note ₹ 15,000 received from Sharma in

full settlement for 60 days)
06 Apr Sharma Dr. 15,450
To Bills Receivable A/c 15,000
To Discount Allowed A/c 400
To Bank A/c 50
(Promissory note established from Sharma, dishonoured)
06 Apr Sharma Dr. 50
To Interest A/c 50
(Interest ₹ 50 credited on account of Promissory Note

dishonoured)
06 Apr Bank A/c Dr. 15,500
To Sharma 15,500
(Cheque received from Sharma)
Ledger

 Sharma’s Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2017 2017
01 Feb Balance b/d 15,400 02 Feb Bills Receivable 15,000
06 Apr Bills Receivable 15,000 02 Feb Discount Allowed 400
06 Apr Discount Allowed 4,000 06 Apr Bank 15,500
06 Apr Bank 50
06 Apr Interest 50
30,900 30,900
Q17Written answer

Lilly sold goods to Mathew on 1.3.2017 for ₹ 12,000 and drew upon Mathew a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a non-business day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act.1881. The bill was dishonoured by Mathew and Lilly paid ₹ 45 as noting charges. Mathew settled the claim of Lilly five days after the dishonour of the bill by a cheque, which includes interest @ 12% for the term of the bill. Journalise the above transactions in the books of Lilly and Mathew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.

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The transactions are journalized as follows:

Books of Lilly

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
01 Mar Mathew Dr. 12,000
To Sales A/c 12,000
(Goods traded to Mathew)
01 Mar Bills Receivable A/c Dr. 12,000
To Mathew 12,000
(Mathew’s acceptance payable after two months received)
01 Mar Bank A/c Dr. 11,820
Discount A/c Dr. 180
To Bills Receivable A/c 12,000
(Mathew’s bill discounted at 9% p.a.)
03 May Mathew A/c Dr. 12,045
To Bank A/c 12,045
(Mathew’s acceptance dishonoured bank paid ₹ 45 as

noting charges)
Note: In this question, May 04 has been considered as

Holiday, so the date of maturity will be 03 May 2017 in

place of May 04, 2017.
08 May Mathew Dr. 241
To Interest A/c 241
(Interest @ 12% credited to Mathew on account of bill dishonoured)
08 May Bank A/c Dr. 12,286
To Mathew 12,286
(Cheque received from Mathew for the amount due from him)
Ledger

Mathew’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
01 Mar Sales 12,000 01 Mar Bills Receivable 12,000
03 May Bank 12,045 08 May Bank 12,286
08 May Interest 241
24,286 24,286
Books of Mathew

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
01 Mar Purchases A/c Dr. 12,000
To Lilly 12,000
(Goods purchased from Lilly)
01 Mar Lilly Dr. 12,000
To Bills Payable A/c 12,000
(Lilly’s acceptance payable after two months accepted)
03 May Bills Payable A/c Dr. 12,000
Noting Charges A/c Dr. 45
To Lilly 12,045
(Bill drawn by Lilly dishonoured)
08 May Interest A/c Dr. 241
To Lilly 241
(Interest charged @ 12% from Lilly on account of bill dishonoured)
08 May Lilly Dr. 12,286
To Bank A/c 12,286
(Amount paid to Lilly through cheque)
Ledger

 Lilly’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
01 Mar Bills Payable 12,000 01 Mar Purchases 12,000
09 May Bank 12,286 03 May Bills Payable 12,000
03 May Noting charges 45
08 May Interest 241
24,286 24,286
Q18Written answer

Kapil purchased goods for ₹ 21,000 from Gaurav on 1.2.2017 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2017 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid ₹ 100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gourav.

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The necessary journal entries are shown below:

Books of Gaurav

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
01 Feb Kapil Dr. 21,000
To Sales A/c 21,000
(Goods traded to Kapil)
01 Feb Bills Receivable A/c Dr. 21,000
To Kapil 21,000
(Kapil’s acceptance received)
25 Feb Bills Sent for Collection A/c Dr. 21,000
To Bills Receivable A/c 21,000
(Bill Receivable sent to bank for collection)
04 Mar Kapil Dr. 21,100
To Bill Sent for Collection A/c 21,000
To Bank A/c 100
(Kapil’s acceptance dishonoured)
Books of Kapil

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
01 Feb Purchases A/c Dr. 21,000
To Gaurav 21,000
(Goods purchased from Gaurav)
01 Feb Gaurav Dr. 21,000
To Bills Payable A/c 21,000
(Bill drawn by Gaurav payable after one month

accepted)
04 Mar Bills Payable A/c Dr. 21,000
Noting Charges A/c Dr. 100
To Gaurav 21,100
(Bill drawn by Kapil dishonoured)
Q19Written answer

On Feb. 14, 2017 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On 10 Apr, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹ 2,000 in cash and draw a new bill for the balance including interest ₹ 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.

Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.

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The necessary journal entries are recorded below:

Books of Rashmi

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
14 Feb Alka Dr. 7,500
To Sales A/c 7,500
(Goods traded to Alka)
14 Feb Cash A/c Dr. 500
Bills Receivable A/c Dr. 7,000
To Alka 7,500
(Cash received ₹ 500 and the bill accepted by Alka)
10 Apr Alka Dr. 7,000
To Bills Receivable A/c 7,000
(Alka got the bill cancelled)
10 Apr Cash A/c Dr. 2,000
 To Alka 2,000
(Received cash from Alka)
10 Apr Alka Dr. 500
To Interest A/c 500
(Interest charged on the amount due from Alka)
10 Apr Bills Receivable A/c Dr. 5,500
To Alka 5,500
(Alka’s acceptance payable of two months received)
13 June Cash A/c Dr. 5,500
To Bills Receivable A/c 5,500
(Alka’s acceptance met on due date)
Ledger 

Alka’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
14 Feb Sales 7,500 14 Feb Cash 500
10 Apr Bills Receivable 7,000 14 Feb Bills Receivable 7,000
10 Apr Interest 500 10 Apr Cash 2,000
10 Apr Bills Receivable 5,500
15,000 15,000
Books of Alka

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
14 Feb Purchases A/c Dr. 7,500
To Rashmi 7,500
(Goods purchased from Rashmi)
14 Feb Rashmi Dr. 7,500
To Cash A/c 500
To Bills Payable A/c 7,000
(Cash paid to Rashmi ₹ 500 and a bill for ₹ 7,000

drawn by Rashmi accepted)
10 Apr Bills Payable A/c Dr. 7,000
To Rashmi 7,000
(Bill cancelled before maturity)
10 Apr Rashmi Dr. 2,000
To Cash A/c 2,000
(Cash paid to Rashmi)
10 Apr Interest A/c Dr. 500
To Rashmi 500
(Interest due to Rashmi)
10 Apr Rashmi Dr. 5,500
To Bills Payable A/c 5,500
(Rashmi’s acceptance payable after two months

accepted)
13 June Bills Payable A/c Dr. 5,500
To Cash A/c 5,500
(The bill met on due date)
Ledger

Rashmi’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
14 Feb Cash 500 14 Feb Purchases 7,500
14 Feb Bills Payable 7,000 10 Apr Bills Payable 7,000
10 Apr Cash 2,000 10 Apr Interest 500
10 Apr Bills Payable 5,500
15,000 15,000
Q20Written answer

Nikhil sold goods for ₹ 23,000 to Akhil on Dec. 01, 2017. He drew upon Akhil a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil discounted the bill immediately with his bank @12 p.a. On the due date Akhil dishonoured the bill of exchange and the bank paid ₹ 100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest @10% p.a. which he agreed. The new bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept ₹ 10,000 in cash immediately and drew a third bill upon him including interest of ₹ 500. Nikhil agreed to Akhil’s request. The third bill was payable after one month. Akhil met the third bill on its maturity. Record the necessary journal entries in the books of Nikhil and Akhil and also prepare Akhil’s account in the books of Nikhil and Nikhil’s account in the books of Akhil.

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Worked solution

The necessary journal entries are recorded as follows:

Books of Nikhil

Journal
Date Particulars L.F. Debit ₹ Credit₹
2017
01 Dec Akhil Dr. 23,000
To Sales A/c 23,000
(Goods traded to Akhil)
01 Dec Bills Receivable A/c Dr. 23,000
To Akhil 23,000
(Akhil’s acceptance received)
01 Dec Bank A/c Dr. 22,540
Discount A/c Dr. 460
To Bills Receivable A/c 23,000
(Akhil’s acceptance discounted at 12% p.a with bank)
2018
04 Feb Akhil Dr. 23,100
To Bank A/c 23,100
(Akhil’s acceptance dishonoured, bank paid

₹ 100 as noting charges)
04 Feb Akhil Dr. 385
To Interest A/c 385
(Interest credited on account of bill dishonoured

at 10% p.a. for two months)
04 Feb Bills Receivable A/c Dr. 23,485
To Akhil 23,485
(New acceptance received from Akhil for

next two months received)
01 Apr Akhil Dr. 23,485
To Bills Receivable A/c 23,485
(The second bill cancelled one week before

maturity)
01 Apr Cash A/c Dr. 10,000
To Akhil 10,000
(Cash received from Akhil)
01 Apr Akhil Dr. 500
To Interest A/c 500
(Interest due from Akhil for the bill)
01 Apr Bills Receivable A/c Dr. 13,985
To Akhil 13,985
(Bill from Akhil received)
May 04 Cash A/c Dr. 13,985
To Bills Receivable A/c 13,985
(The third bill met on due date)
Akhil’s Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
01 Dec Sales 23,000 01 Dec Bills Receivable 23,000
2018 2018
04 Feb Bank 23,100 04 Feb Bills Receivable 23,485
04 Feb Interest 385 01 Apr Cash 10,000
01 Apr Bills Receivable 23,485 01 Apr Bills Receivable 13,985
01 Apr Interest 500
70,470 70,470
Books of Akhil

Journal
Date Particulars L.F. Debit

₹

 Credit Amount

₹
2017
01 Dec Purchases A/c Dr. 23,000
To Nikhil 23,000
(Goods purchased from Nikhil)
01 Dec Nikhil Dr. 23,000
To Bills Payable A/c 23,000
(Bill drawn by Nikhil payable after two months

accepted)
2018
04 Feb Bills Payable A/c Dr. 23,000
Noting Charges A/c Dr. 100
To Nikhil 23,100
(Bill dishonoured on due date and ₹ 100 paid by

the holder of bill)
04 Feb Interest A/c Dr. 385
To Nikhil A/c 385
(Interest due to Nikhil for the bill dishonoured)
04 Feb Nikhil Dr. 23,485
To Bills Payable A/c 23,485
(New bill accepted payable after two months)
01 Apr Bills Payable A/c Dr. 23,485
To Nikhil 23,485
(Bill cancelled before maturity)
01 Apr Nikhil Dr. 10,000
To Cash A/c 10,000
(Cash paid to Nikhil)
01 Apr Interest A/c Dr. 500
To Nikhil 500
(Interest due to Nikhil for bill cancellation)
01 Apr Nikhil Dr. 13,985
To Bills Payable A/c 13,985
(New bill accepted payable after one month)
May 04 Bills Payable A/c Dr. 13,985
To Cash A/c 13,985
(The third bill met on maturity)
Nikhil Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2017 2017
01 Dec Bills Payable 23,000 01 Dec Purchases 23,000
2018 2018
04 Feb Bills Payable 23,485 04 Feb Bills Payable 23,000
01 Apr Cash 10,000 04 Feb Noting Charge 100
01 Apr Bills Payable 13,985 04 Feb Interest 385
01 Apr Bills Payable 23,485
01 Apr Interest 500
70,470 70,470