bill of exchange 3

7/31/2019 Bill of Exchange 3

1/19

Treatment


2/19

Instrument in writing which is drawn by a

person directing another person to pay a

specified sum of money to the bearer of the

instrument or to a specified person


3/19

Drawer who makes the Bill grants credit

Drawee _---

who accepts the bill availsthe credit

Payee---to whom the amount is to bepaid


4/19

Case 1On 1 st April 2010,Ram sold goods to Mohanworth Rs.5,000 and Mohan accepted the bill

drawn upon him at 3 months for Rs.5,000.Identify the parties to BillCase 2 On 1 st April 2010,Ram sold goods to

Mohan worth Rs.5,000 and Mohan acceptedthe bill drawn upon him at 3 months for Rs.5,000 which Ram endorsed it to Shyam.Identify the parties to the Bill


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Term of a Bill :-period between the date of bill isdrawn and the date on which it due

Days of grace:-3 extra days added to theperiod of the bill

Date of maturity :-due date +Grace days


6/19

1. A Bill of Exchange ,dated 12 th July2010payable 3 months after date.

2. A Bill of Exchnge ,dated 31 st March2009,payable 90 days after date

3. A Bill dated 1 st january 2010,is made payable4 months after date


7/19

Discounting of Bill :-presenting the bill to abank and receiving the amount ,usually beforethe due date.

Endorsement of Bill :-Transfer of B/E to another Persona)Endorser -one who transfer the bill

b)Endorsee One who receives the billDishonour of Bill :-it happens when the Draweefails to make the payment


8/19

Renewal of a Bill :-Accepting a new bill inplaceof old bill with the consent of the holder/drawer,if the drawee is not in a position to meet the bill

Retirement of bill :-Paying the amount beforethe due date by the Drawee

Noting of bill :-the process of signing thedishonoured bill by Notary Public to make anoting of dishonour.


9/19

Mohan received from Jagat an acceptance for Rs.5000 on 1/5/2010 for 2 months .On2/5/2010,the same was received by Dev.On thedue date the accptance was duly met.

1. Identify the drawer,drawee ,endorser andendorsee.

2. Identify the situation where Dev submitted the

Bill to Bank on 10/5/2010 and receivedRs.4,9003. Identify the situation where the Drawee paid

the amount on 1/6/2010


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DRAWERS BOOK DRAWEES BOOK

Dt Particulars lf Dr Cr

Customers A/C......Dr To Sales

B/R A/C..............Dr ToCustomers A/C

Cash A/c..............Dr To B/R A/C


Purchases A/C.....Dr To Supplier

Supplier A/C........Dr To B/P

B/P A/C.......Dr To Cash A/C


11/19

Mohan received from Jagat an acceptance for Rs.5000 on 1/5/2010 for 2 months .On2/5/2010,the same was received by Dev.On the

due date the accptance was duly met.

1. Give journal entries in all parties book


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Customers A/C.....Dr To Sales A/C

B/R A/C.................Dr To Customers A/C

Bank A/C.............Dr Discount .Charges ...Dr

To B/R A/C

No Entry

Dt Particulars lf Dr. Cr

Purchases A/C.......Dr To Suppliers A/C

Suppliers A/C.......Dr To B/P A/C

No Entry

B/P A/C..............Dr To Cash


13/19

Discounting Charges=Amount*Rate of discount*(remaining )period of BillFor Eg,if a bill for Rs.10,000 payable after 3

months is discounted @6%p.a.,(a) on the same day of the bill(b)after one month

The discounting charges for (a) 10000*6/100*3/12=150(b)10,000*6/100*2/12=100


14/19



Customers A/C..Dr To Sales

B/R A/C.........Dr To Customers A/C

Creditor A/C ...Dr To B/R A/C

No entry


Purchases A/C..Dr To Suppliers A/C

Suppliers A/C ...Dr To B/P A/C

No Entry

B/P A/C...........Dr To Cash


15/19

Dt Particulars Lf Dr Cr

No Entry

No Entry

B/R A/C........................Dr

To Endorser A/CCash A/C.....................Dr

To B/R A/C


16/19

1.BankA/c Dr To B/R

7.Customer a/c Dr

To Sales

3.Purchase A/C Dr

To Supplier

3.Supplier A/C Dr Tp B/P6.B/P a/c Dr

To Cash5.B/R A/C Dr

To Customer

4Purchase A/C Dr To Sales

8Endorsee A/C DRTo B/R

9Bank a/c Dr Dis. charges a/c Dr

To B/R


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Customers A/C..Dr To Sales A/C

B/R A/C..............Dr To Customers A/c

Bills Sent for Collection A/C....Dr To B/R A/C

Bank A/C ...........Dr

To Bills Sent for Collection A/C

Dt Particulrs lf Dr Cr

Purchases A/C....Dr To Suppliers A/C

Suppliers A/C.....Dr To B/P A/C

No Entry

B/P A/C..............Dr

To Cash A/C


18/19

A Bill of Exchange is drawn by A on B for Rs.10,000 on 31/7/2010 for 2 months.If the billis sent to Bank for collection by the holder on

the next day,a)identify the holder of the billb) what is the corresponding entry in Drawees book for sending bill for collection A/C


19/19

A bill for Rs.5000 is drawn by A on B and acceptedby the latter on 20/4/2010 for 3 months.a)what is the term of the Billb) what is the due date of the Billc)what entries should be passed in the books of the parties ,

i. if A retained the bill till due date

ii. If A discounted the bill with his banker for 950iii. If A endorsed the bill to his creditor C in full

settlement of his debtiv. If A sent it to his bankers for collection

bill of exchange 3

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