DK Goel Solutions Chapter 18 Bills of Exchange

Read below DK Goel Solutions Class 11 Chapter 18 Bills of Exchange. These answers have been developed based on the latest Class 11 DK Goel Accountancy book used by commerce stream students issued for current year and the questions given in each chapter.

This chapter of DK Goel depicts the clear picture of topics like due dates, interest amounts, discounting charges, and many more, its important to understand the concepts of Bills of Exchange as this will help you to do correct accounting.

The chapter also contains lot of questions which can be very helpful for Class 11 commerce students of Accountancy and will also help build strong concepts which will be really helpful in your career.

DK Goel Solutions Class 11 Chapter 18 solutions are free and will help you to prepare for Class 11 Accountancy. Just scroll down and read through the answers provided below

Bills of Exchange DK Goel Class 11 Accountancy Solutions

Students can refer below for solutions for all questions given in your DK Goel Accountancy Textbook for Class 11 in Chapter 18

Short Answer Questions for DK Goel Solutions Class 11 Chapter 18

Question 1: Give a definition of Bill of Exchange and give its four characteristics.

Solution 1:
“A Bill of Exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.” A bill of exchange is a written instrument containing an unconditional order signed by the manufacturer directing a person to pay a certain amount of money either to a certain person or to the holder of the instrument, or to the order of that person.
Bill of Trade characteristics or attributes include:

  1. A paper order is a Bill of Trade.
  2. The trade bill is drawn and signed by the bill’s manufacturer or drawer.
  3. The bill of exchange is an absolute order to pay the sum stated to an entity or drawee. To make it a valuable text, the drawee must welcome it.
  4. The sum mentioned is payable to, or to the bearer, the person named in the bill or his order.

Question 2: What are the parties to a bill of exchange?

Solution 2:
The parties to the trade bills:-
1.) Drawer:- The seller or borrower is entitled to collect somebody’s money. The bill is written or drawn and is known as a cabinet.
2.) Drawee or Acceptor:- The buyer or debtor on which the bill is drawn and who is responsible for paying the sum alluded to in the bill. By writing the word “Accepted” on the bill and then signing it, he decides to pay the number.
3.) Payee:- The person of which the charge is to be made is considered the payee. The payee may be the payee of the bill itself or a third party.

Question 3: State any two advantages of bill of exchange.

Solution 3:
The benefits of exchange bills are listed below:-
1.) Beneficial in the purchase and selling of loaned goods:- A bill of exchange shall act as a written proof of debt. It is evidence that the sum written in it is attributed to the seller of products. As such, without trouble, the items can be exchanged on lease.
2.) Legal Record:- In the light of laws, it is a legitimate document. In contrast to a written pledge, it will be easier to reclaim the balance legitimately if the drawee failed to make the payment.

Question 4: What is the difference between a bill of exchange and a draft?

Solution 4: A bill is considered as a draft when its acceptance is made.

Question 5: Prepare an imaginary specimen of a bill of exchange.

Solution 5:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 6: Give a definition of Promissory Note and give its four characteristics.

Solution 6:
Sometimes, the purchaser of the goods or debtor himself writes a note, signs it and gives it to the seller of the goods. It is called a ‘Promissory Note’.
Features of a Promissory Note:-
1.) It must be in writing.
2.) The amount to be paid must be specified.
3.) It must be signed by the maker or promisor.
4.) The name of the payee must be mentioned in it.

Question 7: What are the parties to a promissory note?

Solution 7:
Parties to a Promissory Note:-
1.) Maker:- He is the person who writes a promissory note and signs it.
2.) Payee:- He is the person who is entitled to get the payment.

Question 8: Prepare an imaginary specimen of a promissory note.

Solution 8:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 9: Give four differences between a Bill of Exchange and a Promissory Note.

Solution 9:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 10: Distinguish between Bills of Exchange and Promissory note on the following basis:
(a) Order or Promise and Parties (b) Acceptance (c) Parties (d) Noting

Solution 10:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 11: What are the different uses available to a holder for dealing with bills receivable?

Solution 11:
The uses of bills receivable are below:—
1.) Until the date of maturity, he may hold it.
2.) Before the date of maturity, the banker can discount it.
3.) Before the date of maturity, he may support it for any other faction.
4.) He may send it out for collection to his banker.

Question 12: What is meant by “Retiring a bill under rebate”?

Solution 12:
If the drawee pays the bill past its due date, it is called the removal of the bill. The holder of the bill normally gives him a refund in such a situation, legally called a voucher.

Question 13: Explain in brief the meaning of the following terms:
(i) Endorsement of a bill
(ii) Renewal of a bill
(iii) Dishonour of a Bill
(iv) Date of Maturity

Solution 13:
(i) Endorsement of a bill:- Endorsement indicates that an exchange bill is signed for the purpose of being passed to another bill. Through placing his signature on the back of the document, the holder of a bill receivable may support the bill to another person.

(ii) Renewal of a bill:- The bill collector considers himself unable to comply with the bill on the due date. In any case, the owners of the bill will be asked to cancel the original bill and draw up a new bill in place of the existing one.

(iii) Dishonour of a debt:- If the bill collector refuses to pay the bill balance on the day of maturity or becomes insolvent, the bill is considered dishonour.

(iv) Day of maturity:- The ‘due date’ or ‘date of maturity’ is considered the date on which the balance of the bill becomes due. In other words, the due date is considered the date at which the term of the bill expires.

Question 14:
Explain any three of the following:
(i) Retiring of a bill of exchange
(ii) Discount of a bill of exchange
(iii) Bill sent to bank for collection
(iv) Noting Charges

Solution 14:
(i) Retiring of the bill of exchange:- If the drawee makes payment before the due date of the bill, it is called withdrawal of the bill. The holder of the bill typically gives him a refund in such a situation, legally called ‘rebate’.
(ii) Exchange bill discount:- If the holder of a B/R wants money before the maturity date, he will discount the bank’s bill in order to obtain cash for it. Discount involves en-cashing the bill for the protection of the bill before the date of its maturity or borrowing from the bank.
(iii) Bill sent to the bank for collection:- Often the bill is sent to the bank with the instructions to hold the bill until maturity and recover its balance from the recipient on that date instead of discounting the bill.
(iv) Noting Charge:- The bill is typically turned over to an individual entitled ‘Noting Public’ assigned by the court to determine the fact that the bill was duly addressed and dishonoured.

Question 15: What Journal entries will be will be made by the drawer in his books, when :
(i) a Bill is drawn:
(ii) a Bill is discounted; and
(iii) a Bill is dishonoured and noting charges paid

Solution 15:
(i) a Bill is drawn:-

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 16: What do you mean by dishonour of a bill? What entries will be made in the books of drawer, if:-
(i) Bill is with the drawer himself,
(ii) Bill is discounted with the Bank,
(iii) Bill is with the endorsee, and
(iv) Bill is sent to the Bank for collection.

Solution 16:
(i) Bill is with the drawer himself:-

Journal Entry

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

(ii) Bill is discounted with the Bank:-
Journal Entry

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

(iii) The Bill is with the endorser: endorsement means the transfer to another person of the Bill of Exchange or Promissory Note. To collect the invoice, the person receiving the Bill of Exchange or Promissory Note is approved. An endorser is the one who passes the Bill of Exchange or Promissory Note in favor of another person. The individual who is endorsed by the Bill of Exchange or Promissory Note is called the endorser.

(iv) Bill sent to the bank for collection:- Often the bill is sent to the bank with orders to hold the bill until maturity and recover its balance from the recipient on that date instead of discounting the bill.

Question 17: What do you mean by ‘Accommodation Bill?

Solution 17:
A bill can be approved without thought in order to obligate a neighbor. Such a bill is referred to as an accommodation bill.

Question 18: Distinguish between an accommodation bill and a trade bill.

Solution 18:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Practical Questions

Question 1: Calculate the due dates of the bills in the following cases:
Date of the Bills Period

I. 1st February, 2017 2 months
II. 31st January, 2017 3 months
III. 30th September, 2017 2 months
IV. 30th September, 2017 3 months
V. 29th December, 2017 2 months
VI. 31st December, 2017 2 months
VII. 15th July, 2017 30 days
VIII 27th January, 2016 1 month

Solution 1:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Point in Mind:
Bills Due Date = Date of Bill Drawn + Period + Grace Days

Question 2: Find out the due dates of the bills in the following cases:
Date of the Bills Period

I. 29th May, 2017 4 months
II. 31st March, 2017 1 month
III. 21st July, 2017 60 days
IV. 14th May, 2017 90 days
V. 28th January, 2016 1 month
VI. 31st January, 2016 1 month
Emergency holiday 22nd September.

Solution 2:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Point in Mind:-
Bills Due Date = Date of Bill Drawn + Period + Grace Days

Question 3: On 1st January, 2019, Ajay sold goods to Bhushan for Rs. 50,000. Ajay draws a bill of exchange for two months for the amount due which Bhushan accepts and returns it to Ajay. Bhushan met the bill on the due date. Pass Journal entries in the books of Ajay and Bhushan.

Solution 3:

Journal Entries in the Books of Ajay

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Bhushan

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 4: On Jan. 1,2017, Tarun purchased goods from Arun for Rs. 20,000 and immediately drew a promissory note in favour of Arun payable after 1 month. Date of maturity of the promissory note was declared emergency holiday by the Government of India under the Negotiable Instrument Act 1881. Tarun met the promissory note according to the provisions of law. Pass the necessary Journal entries in the books of Arun and Tarun.

Solution 4:

Journal Entries in the books of Arun

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

                                Journal Entries in the books of Tarun

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 5: On Feb. 6, 2017 A sold goods for Rs. 1,00,000 to B. B paid 40% immediately on which A allowed a cash discount of Rs. 500. For the balance A drew a bill on B payable after 30 days. Due date of bill was a public holiday and the bill was met as per the provisions of Negotiable Instrument Act. Journalise the above transactions in the books of A and B.

Solution 5:

Journal Entries in the books of ………….

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of …………

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Here the due date is 11 March, 2017 which is a holiday then the due date is 10 March, 2017

Point in mind:-
If due date falls on holiday, then due date is succeeding date.

Question 6 (A): Vishal sold goods for Rs. 70,000 to Manju on Jan. 5, 2019 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.

Solution 6 (A):

Journal Entries in the Books of Vishal

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of Discount:-
Discount Charges = Rs. 7,000 × 12% × 2/12
Discount Charges = Rs 14

Question 6 (B): On 15th February, 2019, X sold goods to Y for Rs. 60,000. On the same day, Y accepted a bill drawn upon him by X for three months for Rs. 60,000. X immediately discounted the bill at 15% p.a. at his bank and Y met the bill on maturity. Make Journal entries in the books of both the parties.

Solution 6 (B):

Journal Entries in the Books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of Discount Charges:-
Discount Charges = Rs. 6,000 × 15% ×3/12
Discount Charges = Rs 225

Question 7: B owed 20,400 to A. On 15th January, 2019, he accepted a bill for Rs. 20,000 for two months drawn by A in full settlement of his debt. On 18th January, 2019, A endorsed the bill to his creditor C. The bill was duly met on the date of maturity. Pass Journal entries in the books of A, B and C.

Solution 7:

Journal Entries in the Books of A

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 8: On 10th January, 2017, A sells goods to B for Rs. 12,000. On that date, B accepted a bill drawn upon him by A at two months for Rs. 12,000. A retains the bill till due date and on due date sends the bill to the Banker for collection. In due course, A receives the information from the Bank that the bill has been duly met. Pass Journal Entries in the books of A and B.

Solution 8:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 9: On Jan. 15, 2017, Kusum sold goods for Rs. 30,000 to Pushpa and drew upon her three bills of exchanges of Rs. 10,000 each payable after one month, two months and three months respectively. The first bill was retained by Kusum till its maturity. The second bill was endorsed by her in favour of her creditor Khushboo and the third bill was discounted by her immediately @ 6% p.a. All the bills were met by Pushpa. Journalise the above transactions in the books of Kusum and Pushpa.

Solution 9:

Journal Entries in the Books of Kusum

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entry in the books of Pushpa

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of Discount Charges:-
Discount Charges = Rs. 10,000 × 6% × 3/12
Discount Charges = Rs 150

Question 10: X draws on Y a bill for Rs. 4,000 which was duly accepted by Y. Y meets the bill on its due date. Show what entries would be passed in the books of X and Y under each of the following circumstances:
(i) If X retains the bill till due date.
(ii) If X discounts the same with his banker paying Rs. 100 for discount.
(iii) If X endorses the same to his creditor Z, in full settlement of his debt of Rs. 4,080.
(iv) If X sends the bill to his banker for collection.

Solution 10:

Journal Entries in the books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Y

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 11: X made the following sales to Y:
Date Amount (Rs.)

Jan. 01, 2017 20,000
Jan. 08, 2017 25,000
Jan. 10, 2017 10,000
Jan. 15, 2017 40,000
For all the sales X drew bills on Y payable after 60 days. Bill drawn on Jan. 01, 2017 was retained by X with him till its due date. The bill drawn on Jan. 08, 2017 was discounted by X from the bank at 9% p.a. The bill drawn on Jan. 10, 2017 was endorsed by X to his creditor Z in full settlement of Rs. 10,400. On March 12, 2017 X sent the bill drawn on Jan. 15, 2017 to his bank for collection. All the bills were met by Y on due dates. Pass necessary journal entries in the books of X and Y and prepare Y’ s account in the books of X and X’s account in the books of Y.

Solution 11:

Journal Entries in the Books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Y’s  Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Y

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

X’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of Discount Charges:-
Discount Charges = Rs. 25,000 × 9/100 × 60/365
Discount Charges = Rs 370.

Question 12: On January 1, 2017, Ajay sold goods to Balbir for Rs. 10,000 at a discount of 20%. On that date, Balbir accepted a bill, drawn on him by Ajay for Rs. 8,000 payable 3 months after sight. Having surplus funds, Balbir paid off the bill on 4th March, 2017 and was allowed a rebate of 18% per annum. Show Journal entries in the books of Ajay and Balbir.

Solution 12:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Balbir

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of amount of Rebate:-
Amount of Rebate = Rs. 8,000 × 18/100 × 112
Amount of Rebate = Rs. 120

Question 13: On 17th April, 2016, X sold goods to Y for Rs. 80,000 and draws a bill for 2 months upon Y for the amount due. Y accepted the bill and returned it to X. On due date the bill became dishonoured and X paid Rs. 400 as Noting Charges. Fifteen days later Y pays the amount due to X. Pass Journal entries in the books of both the parties.

Solution 13:

Journal Entries in the books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Y

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 14 (A): On 1st April, 2016, B accepts a bill drawn by A at three months for Rs. 8,000 in payment of debt. On the due date the acceptance is dishonoured and A gets the bill noted paying Rs. 100. On 4th July, 2016 A draws a new bill payable after 73 days provided interest is paid in cash @ 15% p.a. To this B is agreeable. The bill is met on maturity.
Record these transactions in the Journal of both the parties.

Solution 14 (A):

Journal Entries in the Books of A

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of B

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Amount of Interest = Rs. 8,100 × 15% × 73/365
Amount of Interest = Rs. 243

Question 14 (B): On 15th October, 2016, Y purchased goods worth Rs. 75,000 from X, and accepted a three months bill for this amount drawn by X. On the due date, it was dishonoured. Noting charges paid by X Rs. 600. On 18th January, 2017, Y requested X for renewal of the bill for another two months, for which X agrees, provided that interest is paid @ 15% p.a. in cash. Make Journal entries of these transactions in the books of X and Y.

Solution 14 (B):

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Y

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Amount of Interest = Rs. 75,600 × 15% × 2/12
Amount of Interest = Rs. 1,890

Question 15: On 1st January, 2018, Dinesh purchased goods from Chander for Rs. 60,000 plus CGST and SGST @ 6% each. Dinesh pays Rs. 7,200 in cash and accepts a bill drawn by Chander for the balance amount payable after two months. On the due date Dinesh is able to manage Rs. 20,000 in cash and he arranges with Chander for the retirement of the bill in consideration of this payment and a fresh bill at four months for the balance plus interest at 18% per annum. The second bill is duly met on maturity. Make the necessary Journal entries in the books of Chander and Dinesh.

Solution 15:

Journal Entries in the books of Chander

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Dinesh

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:
Amount of Interest = Rs. 40,000 × 18% × 4/12 = Rs. 2,400

Question 16: A sells goods for Rs. 30,000 to B on 1st January, 2017 and on the same day draws a bill on B at three months for the amount. B accepts it and returns it to A, who discounts it on 4th February, 2017 with his bank at 18% per annum. The acceptance is dishonoured on the due date, the noting charges paid by the bank being Rs. 200. On 4th April, 2017, B accepts a new bill at two months for the amount then due to A together with interest at 12 per cent per annum. Make Journal entries to record these transactions in the books of A and B.

Solution 16:

Journal Entries in the Books of A

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of B

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:
Discount Charges = Rs. 30,000 × 18% × 2/12 = Rs. 900

Amount of Interest = Rs. 30,200 × 12% × 2/12 = Rs. 604

Question 17: On 21st Sept. 2017, Radhika sold goods for Rs. 2,00,000 to Parvati and drew upon later a bill for the same amount payable after 3 months. The bill was accepted by Parvati, Radhika discounted the bill from bank at a discount of 15% p.a. on 21st Oct., 2017. On maturity, the bill was dishonoured. Parvati agreed to pay Rs. 1,20,000 in cash including Rs. 3,000 interest and accepted a new bill for 3 months. The new bill was endorsed to Gayatri in full settlement of his account Rs. 85,000. It was duly met on maturity. Pass entries in the books of Radhika.

Solution 17:

Journal Entries in the books of Radhika

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 18: Asha sold goods worth Rs. 19,000 to Nisha on March 2, 2016. Rs. 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 @ 10% p.a. On the due date Nisha dishonoured the bill and the bank paid Rs. 30 as noting charges. On 5th June, Nisha paid Rs. 3,030 (including noting charges) in cash and accepted a new bill at one month for the amount due to Asha together with interest @ 15% p.a. Record the necessary journal entries in the books of Asha and Nisha.

Solution 18:

Journal Entries in the books of Asha

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Notes:-
Amount of Interest = Rs. 12, 000 × 15% × 1/12 = Rs. 150

Amount of Discount = Rs. 15, 000 × 10% × 3/12 = Rs 375

Journal Entries in the books Nisha

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 19: Sold goods for Rs. 40,000 to B on Jan. 01, 2017. He drew upon B a bill of exchange for the same amount payable after 1 month. B accepted the bill and sent it back to A. A discounted the bill immediately with his bank @ 9% p.a. On the due date B dishonoured the bill of exchange and the bank paid Rs. 200 as noting charges. B requested A to draw a new bill upon him with interest @ 12% p.a. which he agreed. The new bill was payable after 1 month. One week before the maturity of the second bill B requested A to cancel the second bill. He further requested to accept Rs. 15,000 in cash immediately and draw a third bill upon him including interest of Rs. 1,000. A agreed to B’s request. The third bill was payable after one month. B met the third bill on its maturity. Record the necessary journal entries in the books of A and B and also prepare B’s account in the books of A and A’s account in the books of B.

Solution 19:

In the Books of A
Journal Entries

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

B’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

In the books of B
Journal Entries

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

A’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Notes:-
Discount Charges = Rs. 40,000 × 9% × 1/12 = Rs. 300

Amount of Interest = Rs. 40,200 × 1% × 1/12 = Rs. 402

Question 20: Journalise the following transaction in the books of Rajni:
Geeta’s acceptance of Rs. 20,000 which had been discounted with the bank for Rs. 19,500 has been returned by the Bank dishonoured. Noting charges paid by Bank Rs. 25.

Solution 20:

Journal Entries in the books of Rajni

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 21 (A): A Bill receivable for Rs. 10,000, which had been discounted for Rs. 9,700, is dishonoured and the Bank paid Rs. 20 as noting charges.
Pass entries in the books of drawer and drawee.

Solution 21 (A):

Journal Entries in the books of Drawer

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Drawee

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 21 (B): Journalise the following in the books of X:
Y’s acceptance for Rs. 2,00,000 which was discounted by X from the bank has been dishonoured, noting charges paid by bank being Rs. 100.

Solution 21 (B):

Journal Entries in the Books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 22: On 10th April, 2018, Ravi purchased from Mohan goods for Rs. 30,000 plus CGST and SGST @ 9% each. Ravi paid Rs. 15,400 in cash and accepted a bill for two months for the balance amount drawn on him by Mohan. Mohan endorsed the bill to Rakesh. The bill was dishonoured on the due date. Rakesh had to spend Rs. 100 as noting charges.
Immediately after the dishonour, Mohan accepted a new bill drawn by Rakesh, in which Rs. 200 for interest were also included. After 20 days of the dishonour of the bill, Ravi paid full amount of Mohan including Rs. 50 as interest. Show Journal entries in the books of Ravi, Mohan and Rakesh.

Solution 22:

Journal Entries in the books of Mohan

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Ravi

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Rakesh

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 23: On March 4, 2017, A purchased from B goods for Rs. 50,000. A paid 40% immediately and for the balance gave a promissory note to B payable after 30 days. B immediately endorsed the promissory note in favour of his creditor C for the full settlement of a debt of Rs. 31,000. On the due date the bill was dishonoured and C paid Rs. 100 as noting charges. On the same date C informed B about the dishonour of the bill. B settled his debt to C by cheque for Rs. 30,100 which includes noting charges. A settled B’s claim by cheque for the same amount.
Record the necessary journal entries in the books of A, B and C for the above transactions and prepare A’s and C’s accounts in the books of B, B’s account in the books of A and also B’s account in the books of C.

Solution 23:
C’s Account

Dr. Cr.

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of A

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 24: On Feb. 01, 2017, Mohan sold goods worth Rs. 25,000 to Naresh and drew upon him a bill payable after 90 days. Naresh accepted the bill and Mohan endorsed the bill immediately in favour of his creditor Raja in full settlement of his account of Rs. 25,300. One week before the maturity of the bill Naresh requested Mohan to cancel the bill and draw upon him a new bill including interest of Rs. 400. Mohan agreed to it. Mohan immediately took the bill from Raja by making the payment to him and then drew upon Naresh a new bill for 30 days which was duly met by Naresh on due date. Pass necessary entries in the books of Mohan.

Solution 24:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 25: A purchased goods for Rs. 15,000 from B on March 01, 2017 and accepted a bill of exchange drawn by B for the same amount. The bill was payable after 60 days. On April 28, B sent the bill to his bank for collection. The bill was duly presented by the bank. A dishonoured the bill and the bank paid Rs. 150 as noting charges.
Record the necessary journal entries for the above transactions in the books of A and B.

Solution 25:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 26: Vimal purchased goods Rs. 25,000 from Kamal on Jan. 15, 2017 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 :

(i) The bill was retained by Kamal till the date of its maturity.
(ii) The bill was immediately discounted by Kamal with is bank @ 6% p.a.
(iii) The bill was endorsed by Kamal in favour of his creditor Sharad.
(iv) Five days before its maturity the bill was sent by Kamal to his bank for collection.

Solution 26:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 27: X draws upon Y a bill of Rs. 10,000 for three months on 1st July, 2016. The bill was duly accepted and returned by Y. On due date bill became dishonoured and noting charges paid under each of the following circumstances Rs. 75. Pass entries in the following cases:
(i) If drawer retains the bill with him till due date.
(ii) If drawer discounts the same with his Banker and noting charges paid by the Banker.
(iii) If drawer endorses the same to his creditor Z and noting charges paid by Z.
(iv) If drawer sends the bill for collection to his Banker and noting charges paid by the Banker.

Solution 27:

Journal Entries in the Books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 28: What Journal entry will be passed in the books of drawer (X) and drawee (Y) at the time of dishonour of bill in the following cases:
(i) If bill of Rs. 50,000 was discounted from bank and noting charges paid by the bank was Rs. 600.
(ii) If B/R of Rs. 50,000 was endorsed in favour of Z. Noting charges paid by Z Rs. 600.
(iii) If B/R is returned with drawer and noting charges were Rs. 600.

Solution 28:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 29: A sold goods to B for Rs. 60,000 Charging IGST @18% and immediately drew a bill on B who duly accepted the same. A endorsed the bill to C. C endorsed it to his creditor D. D discounted the bill for Rs. 68,000. On the date of maturity, the bill was dishonoured and Bank paid noting charges amounting to Rs. 200.
Show Journal entries in the books of all the parties to record these transactions.

Solution 29:

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of B

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of D

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 30: On 1st Jan., 2016, Satish drew on Harish three bills of exchange in full settlement of claims, the first for Rs. 14,000 at one month; the second for Rs. 16,000 at two months and the third for Rs. 18,000 at three months. The bills were duly accepted by Harish. The first bill was endorsed by Satish to his creditor Rajnish on 3rd Jan., 2016.
The second bill was discounted on 15th Jan. for Rs. 15,900 and the third bill was sent to bank for collection on 4th Feb. All the bills were met on maturity except the second bill which was dishonoured, noting charges being paid Rs. 240. Satish charged Rs. 300 for interest from Harish and drew on him a fourth bill for two months for Rs. 16,540. The fourth bill was duly met on maturity.
Give Journal entries in the books of Satish and Harish.

Solution 30:

Journal Entries in the Books of Satish

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Harish

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 31: On 1st January, 2010, Arun purchased from Barun goods invoiced at Rs. 10,000. On the same date, Barun drew upon Arun a bill for the amount at 2 months and Arun accepted the same. On 4th January, 2010, Barun got the bill discounted with his bank @12% per annum. On due date, Arun told Barun that he was not in a position to pay the full amount and requested Barun to accept Rs. 5,000 in cash and draw a fresh bill at 2 months for the remaining amount plus interest at 15% per annum, Barun agreed. The second bill was duly met on the due date. Give journal entries to record the above transactions in the books of Barun.

Solution 31:

Journal Entries in the Books of Barun

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Discount Charges = Rs. 10,000 × 12% × 2/12 = Rs. 200

Amount of Interest = Rs. 5,000 × 15% × 2/12 = Rs. 125

Question 32: Darshan sold goods for Rs. 40,000 to Varun on 8.1.2017 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.

Solution 32:

Journal Entries in the Books of Darshan

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Varun

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Discount Charges = Rs. 40,000 × 6% × 2/12
Discount Charges = Rs. 400

Question 33: On Jan. 1, 2017 Neha sold goods for Rs. 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 transactions in the books of Neha and Muskan.

Solution 33:

Journal Entries in the Books of Neha

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Muskan

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Amount of Rebate = Rs. 20,000 × 12% × 2/12
Amount of Rebate = Rs. 200

Question 34: Leena sold goods to Meena on March 01, 2009 for Rs. 68,000 and drew two bills of exchange of the equal amount upon Meena payable after three months. Leena immediately discounted the first bill with her bank at 12% p.a. The bill was dishonoured by Meena and Bank paid Rs. 55 as noting charges. The second bill was retired on May 04, 2009 under a rebate of 6% p.a. with mutual agreement. Journalise the above in the books of Leena and Meena.

Solution 34:

Journal Entries in the books of Leena

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Meena

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Notes:-
(1) Discount Charges = Rs. 34,000 × 12% × 3/12
Discount Charges = Rs. 1,020

(2) Amount of Rebate = Rs. 34,000 × 6% × 1/12
Amount of Rebate = Rs. 170

Question 35:Anita purchased goods for Rs. 23,000 from Kavita on October 15, 2009 and accepted a bill of exchange drawn upon her by Kavita payable after two months. On the date of maturity the bill was duly presented for payment. Anita dishonoured the bill. The payee noted with Rs. 95 as noting charges.
Record the necessary journal entries in the books of Kavita and Anita, when (a) The bill was immediately discounted by Kavita with her Bank @ 9% p.a. (b) The bill was endorsed by Kavita in favour of her creditor Shankar after one month.

Solution 35:

Journal Entries in the Books of Kavita

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Anita

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of Discount Charges
Discount Charges = Rs. 23,000 × 9% × 2/12
Discount Charges = Rs. 345

Question 36: Abdulla sold goods to Tahir on Jan. 17, 2017 for Rs. 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 Rs. 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of Rs. 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.

Solution 36:

Journal Entries in the books of Abdulla

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Tahir’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Tahir

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Abdulla’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 37: X sold goods to Y on 1.3.2017 for Rs. 12,000 and drew upon Y a bill of exchange for the same amount payable after two months. X immediately discounted the bill with his bank at 9% p.a. The maturity date of the bill was a non business day (holiday), therefore, X had to present the bill as per the provisions of the Indian Instruments Act, 1881. The bill was dishonoured by Y and X paid Rs. 45 as noting charges. Y settled the claim of X five days after the dishonour of the bill by a cheque which included interest @ 12% for the term of the bill.
Journalise the above transactions in the books of X and Y and prepare Y’s account in the books of X and X’s account in the books of Y.

Solution 37:

Journal Entries in the books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

Y’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Y

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

X’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Notes:-
Calculation of Discount Charges
Discount Charges = Rs. 12,000 × 9% × 2/12
Discount Charges = Rs. 180

Calculation of amount of Interest
Amount of Interest = Rs. 12,045 × 12% × 2/12
Amount of Interest = Rs 241

Point of Knowledge:-
Here the due date is May 04, 2017 which is a holiday then the due date is 03 May, 2017. If due date falls on Public holiday, then due date is preceding date.

Question 38: On 1st February 2018, A sold goods to B for Rs. 40,000 Charging CGST and SGST @ 9% each. B pays Rs. 17,200 in cash and accepted a three months bill for the balance. On the due date, B expressed his inability to meet the bill and offered Rs. 12,000 in cash and to accept a new bill for one month for the balance plus interest at 18% p.a. A agrees to the proposal. On the due date, the bill was duly honored by B. Pass entries in the books of A and B.

Solution 38:

Journal Entries in the books of A

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

In the books of B
Journal Entries

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

Working Note:-
Calculation of amount of Interest
Amount of Interest = Rs. 18,000 × 18% ×1/12
Amount of Interest = Rs 270

Question 39: On 15th January 2018, X sold goods to Y for Rs. 50,000 charging IGST @ 12%. Y immediately paid Rs. 6,000 in cash and accepted two bills of equal amount, the first for one month and the second for two months. The first bill was met on due date but on the due date of the second bill, Y requested that the bill be renewed for a further period of two months. X agreed provided that interest at 15% p.a. was paid immediately in cash. Y agreed to this. The second bill was met on the due date.
Give journal entries in the books of X and Y.

Solution 39:

Journal Entries in the books of X

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

Journal Entries in the Books of Y

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of amount of Interest
Amount of Interest = Rs. 25,000 × 15% × 2/12
Amount of Interest = Rs. 625

Question 40: On 1st January 2017, Amar sold goods to Akbar for Rs. 60,000. Akbar accepts two bills of Rs. 25,000 for 2 months, and Rs. 35,000 for 3 months.
The first bill was discounted from bank on 3rd January 2017 for Rs. 24,900 and 2nd bill endorsed to Anthony on 15th January 2017.
First bill was met on maturity but second bill got dishonoured and noting charges of Rs. 200 being paid. Amar charged Rs. 300 as Interest and drew another bill for the amount due for further 2 months. This bill was met on maturity.
Pass the necessary Journal Entries in the books of Amar, Akbar and Anthony.

Solution 40:

In the books of Amar (Drawer)
Journal Entries

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

Journal Entries in the books of Akbar (Drawee)

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Anthony

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 41: Manohar drew a bill of exchange on Pushkar, his debtor, for Rs. 20,000 on 1st March 2016 for 3 months. Pushkar accepted the same and returned it to the drawer. Manohar endorsed the bill to Yadu on 1st April 2016 for a debt of equal amount. Yadu discounted it with the bank at 15% p.a. on 1st May 2016. On the due date the bill was dishonoured. (Noting charges amounted to Rs. 100). Show the journal entries in the books of :
(a) Drawer, (b) Drawee/Acceptor, and (c) Endorsee

Solution 41:

Journal Entries in the Books of Manohar

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Pushkar

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

Working Note:-
Calculation of Discount Charges:-
Discount Charges = Rs. 20,000 × 15% × 1/12
Discount Charges = Rs. 250

Question 42: On 1st January 2017, Hari drew on Gopal, who is his debtor for Rs. 60,000 three bills of exchange: First for Rs. 15,000 at one month, Second for Rs. 20,000 at two months and third for Rs. 25,000 at three months. Gopal accepted all the three bills.
On 5th January 2017, Hari endorsed the first bill to his creditor Satish in full settlement of his account of Rs. 15,200. This bill was duly met on maturity.
On 1st February 2017, the second bill was discounted from the bank @ 12% p.a. This bill was dishonoured on the due date and bank paid Rs. 120 as noting charges. On Gopal’s request, Hari drew a fourth bill on Gopal for 2 months for the amount due plus interest @ 15% p.a.
Third bill was paid under a rebate of 12% p.a. one month before maturity. The fourth bill was sent to bank for collection on 4th May 2017 and was duly met on maturity.
Pass Journal entries in the books of Hari, Gopal and Satish.

Solution 42:

Journal Entries in the Books of Hari

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the books of Gopal

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Journal Entries in the Books of Satish

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Working Note:-
Calculation of Discount Charges:-
Discount Charges = Rs. 20,000 × 12% × 1/12
Discount Charges = Rs 200

Calculation of amount of Interest:-
Amount of Interest = Rs. 20,120× 15% × 1/12
Amount of Interest = Rs 503

Question 43: Harpal sold goods to Sompal for Rs. 12,000. Sompal accepted three bills of exchange, the first for Rs. 5,000 at one month, the second for Rs. 4,000 at two months and the third for Rs. 3,000 at three months. Harpal endorsed the first bill to Rajpal. The first bill was dishonoured. Rajpal paid Rs. 30 as noting charges. Harpal charged Rs. 200 for interest and drew on Sompal a fourth bill for Rs. 5,230. The second bill was also dishonoured, noting charges paid being Rs. 25. Harpal charged Rs. 150 as interest and accepted Rs. 2,175 in cash and drew a fifth bill for Rs. 2,000. The bill was paid on due date. The third and fourth bills were also met.
Pass Journal entries in the books of Harpal and prepare Sompal’s Account in Harpal’s Ledger.

Solution 43:

Journal Entries in the books of Harpal

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18
DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage
DK Goel Solutions Class 11 Chapter 18

Sompal’s Account

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 44: (A) Journalise the following in the books of Hari.
Sohan informs Hari that Mohan’s acceptance for Rs. 13,000, endorsed in favour of Sohan by Hari, has been dishonoured. Sohan agrees to accept Rs. 3,000 in cash and an acceptance at 3 months together with interest @ 12% per annum.

Solution 44: (A)

Journal Entries in the books of Hari

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 44: (B) Journalise the following in the books of Harish.
Harish sends Hari’s acceptance for Rs. 26,000 to Babu to meet his acceptance for the like amount in favour of Babu.

Solution 44: (B)

DK Goel Solutions Class 11 Chapter 18

Question 45: Journalise the following transactions in our books:
(a) Our acceptance to Karan for Rs. 4,500 renewed for 3 months on the condition that Rs. 2,500 is paid in cash immediately and a new bill to be drawn including interest @ 12% p.a.
(b) A bill payable accepted in favour of Hari for Rs. 4,000 returned unpaid due to lack of instructions to the bank. Hari claims Rs. 4,050. (Rs. 50 as noting charges), which is paid by cheque.

Solution 45:

Journal Entries In books of Hari

DK Goel Solutions Class 11 Chapter 18
DK Goel Solutions Class 11 Chapter 18

Question 44: (B) Journalise the following in the books of Harish.
Harish sends Hari’s acceptance for Rs. 26,000 to Babu to meet his acceptance for the like amount in favour of Babu.

Solution 44: (B)

Journal Entries

DK Goel Solutions Class 11 Accounts Chapter 18 Bills of Exchnage

Question 45: Journalise the following transactions in our books:
(a) Our acceptance to Karan for Rs. 4,500 renewed for 3 months on the condition that Rs. 2,500 is paid in cash immediately and a new bill to be drawn including interest @ 12% p.a.
(b) A bill payable accepted in favour of Hari for Rs. 4,000 returned unpaid due to lack of instructions to the bank. Hari claims Rs. 4,050. (Rs. 50 as noting charges), which is paid by cheque.

Solution 45:

Journal Entries In books of Hari

DK Goel Solutions Class 11 Chapter 18
DK Goel Solutions Class 11 Chapter 18

Question 46: Mehak sold goods for Rs. 24,000 to Shally on July 31, 2017 and drew three bills for Rs. 6,000, Rs. 8,000 and Rs. 10,000 payable after two, three and four months respectively. The first bill was kept by Mehak with her till maturity date. She endorsed the second bill in favour of her creditor Kanak. The third bill was discounted on September 3, 2017 @ 12% p.a. from bank. The first and second bill were duly met on maturity but the third bill was dishonoured and the bank paid Rs. 150 as noting charges. On December 3, 2017 Shally paid Rs. 5,000 and noting charges in cash and accepted a new bill at two months after date for the balance amount plus interest Rs. 200. The new bill was met on maturity by Shally. You are required to give the Journal Entries in the books of Mehak.

Solution 46:

Journal Entries

DK Goel Solutions Class 11 Chapter 18
DK Goel Solutions Class 11 Chapter 18
DK Goel Solutions Class 11 Chapter 18
DK Goel Solutions Class 11th Chapter 18 Bills of Exchanges
Explain the Bills of Exchange.

Bill of Exchange is a written instrument utilized between the buyer and seller as per the pre-defined terms and conditions as a mark of the authenticity of due payments. In simple words, a bill of exchange is a written document containing a set of conditions approved by the seller directing a purchase on credit.

List some characteristics of the Bills of Exchange.

Here are the characteristics of the Bills of Exchange –
● A Bill of exchange is a paper order or written document.
● The bill is issued and approved by the seller or the manufacturer.
● The bill of exchange defines a sum to be paid to the entity.
● The due is to be cleared by paying the amount to the person specified in the bill of exchange.

Mention the advantages of the Bills of Exchange.

Here are the advantages of the Bills of Exchange –
Useful during the transaction of loaned goods – A bill of exchange acts as a mark of authentication reflecting a debt. It is proof that the buyer needs to clear the due payment to the seller for a pre-purchased product or service. This enables easy and convenient leasing of goods.
Acts as a legal record – A bill of exchange is a legalized document. Therefore, it is pretty easy for the seller to claim the payments legitimately to the buyer.

What is the key difference between a bill of exchange and a draft?

A bill is a raw document highlighting certain legal points. Whereas the bill, once approved, turns to a draft.

What is a Promissory Note? Mention some of its features.

A promissory note is a written document issued by the buyer himself. It acts as a note of trust signed by the buyer and supplied to the seller on the purchase of goods on a credit basis.
Here are some of the prominent features of promissory notes –
● It is a written document created by the buyer.
● It highlights the complete details of the purchase, including the amount to be paid.
● It must have a mark of authentication for the promisor.
● It must feature the names of the buyer and the seller.

What are the parties involved in a promissory note?

Promissory Note involves two parties – One is the maker, who creates the note, and the other is the payee, the seller who is entitled to the payment.