1st Puc Accountancy Chapter 8 Bills Of Exchange Notes | ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 8 ನೋಟ್ಸ್

1st Puc Accountancy Chapter 8 Bills Of Exchange Notes Question Answer Mcq Pdf Download Class 11 Accounts Chapter 8 Practical Problems Solutions 2023 Class 11 Accounts Chapter 8 Practical Problems With Solutions in 2023 Bills Of Exchange Journal Entries 1 Puc Accountancy 8th Chapter Notes ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 8 ನೋಟ್ಸ್

 

1st Puc Accountancy Chapter 8 Notes

One and Two Marks Qs

Q1. What is meant by dishonour of a bill of exchange?

The situation where the drawee of the bill of exchange is unable to process the payment as per the maturity date of the bill, it is known as dishonour of bill of exchange. With this liability of the acceptor is re-established and he/she becomes a debtor again. To reflect the changes, the receipt of bill of exchange should be reversed.

Q2 Name any two types of commonly used negotiable instruments.

1. Promissory Notes

2. Cheques

Q3 Write two points of distinction between bills of exchange and promissory note.

Basis of Distinction	Bills of Exchange	Promissory Note
Drawn by	Creditor	Debtor
Parties Involved	Three parties are involved which are drawer, payee and drawee.	It involves two parties which are payee and drawer/maker.

Q4 State any four essential features of bill of exchange.

The following four features are considered essential for a bill of exchange:

1. The bill of exchange must be in writing

2. A bill of exchange should contain an unconditional order to pay.

3. Drawer of the bill must sign the bill.

4. The amount and the expiry date should be mentioned specifically in the bill of exchange.

Q5 State the three parties involved in a bill of exchange.

A bill of exchange involves three parties and they are:

1. Drawer/Maker/Holder- Responsible for issuing the bill

2. Payee/Holder- The person who will receive the payment

3. Drawee/Acceptor- One who has to accept the bill

Q6 Name the parties to a promissory note

Two parties are involved in promissory note:

1. Maker/Drawer, Also known as promisor, is the one who is the maker of the note and is the one responsible to pay the sum as mentioned on promissory note.

2. Promisee or Payee is the one who will be receiving the payment.

Q7 What is meant by acceptance of a bill of exchange?

A bill of exchange drawn by a creditor upon debtor involves an unconditional order to pay in writing, but the same must be accepted by the debtor or someone on his/her behalf in order to make the debtor liable to pay. It is a draft before acceptance by debtor. So once the debtor has written the term “accepted” and signed the document, it is then known as bill of exchange and this process is called acceptance of bill of exchange.

Q8 What is Noting of a bill of exchange.

A bill of exchange is said to be dishonoured when the drawee is unable to make the payment upon presenting of the bill by drawer. To retain a legal evidence of the dishonoured bill, notary public needs to record it. The charges levied by notary public for recording the failed transaction is called noting charges and the process of recording is referred to as noting.

Q9. What is meant by renewal of a bill of exchange?

A bill of exchange is said to be renewed when the debtor/acceptor have insufficient funds to pay the drawer and hence requests for time extension in order to make payment. A new bill of exchange is drawn on being agreed by the drawer of the bill. This process is called renewal of bill of exchange. The bill gets renewal only if the drawee agrees to pay a certain rate of interest as decided for the period of extension.

Q10. Give the performa of a Bills Receivable Book.

Serial Number of Bill

Date Received

Date of Bill

Received From Whom

Drawer

Acceptor

Where payable

Term

Due date

Ledger Folio

Amount

Cash Book Folio

Remarks

Q11. Give the performa of a Bills Payable Book.

Serial Number of Bill

Date of Bill

Given To Whom

Drawer

Payee

Payable Where

Term of Bill

Due Date

Ledger Folio

Amount Paid

Date

Cash Book Folio

Remarks

Q12. What is retirement of a bill of exchange?

When a drawee of bill of exchange has adequate funds and requests the drawer to accept the payment before maturity date, and once the drawer accepts, it is known as retirement of the bill of exchange as the bill of exchange is closed before maturity.

Q13. Give the meaning of rebate.

The discount received by a drawee from the holder on advance payment of the bill of exchange to the holder (before due date or maturity date) is known as rebate

Six Marks And long Qs

Q1. What is meant by maturity of a bill of exchange?

The date where the bill is ready for payment is called as maturity of a bill. The date of maturity is arrived after adding 3 days of grace to the due date as per terms of the bill. The concept of due date will further help you in understanding maturity of a bill. It consists of following terms

1. Bill at Sight: This type of bill is due as and when it is presented.

2. Bill after Sight: In this type of bill the due date is calculated from the date the debtor accepts the bill plus the period as per terms of the bill. Maturity date is calculated by adding 3 days to the due date.

3. Bill after Date: In this type of bill, the due date is calculated from the date on which bill is drawn plus the period as per terms of bill. Maturity date is calculated adding 3 days to the due date.

Exceptions to maturity of bill: If the due date of the bill falls on a national holiday (like Independence Day) or on a Sunday, at that time the bill due date is counted one day prior to the original date and if the due date fall on a emergency holiday (like nationwide strike) at that time the bill due date is counted one day later.

Q2.Distinguish between bill of exchange and promissory note.

The points of comparison are as follows:

Basis of Comparison	Bills of Exchange	Promissory Note
What it contains	It contains an order to pay	It contains a promise to pay
Parties	It involves three parties which are : drawer, payee and acceptor	It involves two parties and they are: maker/drawer and payee
Drawn by	Creditor	Debtor
Acceptance	Acceptance required by the debtor	Being drawn by promissor, it requires no acceptance
Payee	The same person can be payee and drawer	Promissor and Payee cannot be same
Noting in case of dishonour	Dishonouring of the instrument, leads to noting of the bill	No requirement of noting
Liability	Liability does not rest with the drawer primarily	Promissor is primarily responsible

Q3. Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.

Retirement of bill of exchange happens when the holder of the bill of exchange receives a payment from acceptor before the accepted maturity date of the bill. In such cases the bill holder provides some discount to the acceptor and such a discount offered is called “rebate”.

The following are the benefits of retiring of a bill of exchange for debtor and creditor:

1. Improves the trust between two parties in transaction, namely, debtor and creditor.

2. Allows creditor to use the money for further business

3. Rebate provided by creditor becomes revenue for debtor

4. More business transactions can be conducted between two parties.

Q4 Explain briefly the purpose and advantages of maintaining of a Bills Receivable Book.

In day to day operations, a business receives many bills. Maintaining a journal for all such bills is a cumbersome task. In this case, a specialized book is created which keeps record of all such bills that are received from the debtors. This book contains all the necessary information such as bill date, due date, amount, debtors name and it is summed up on a periodical basis and the balance thus obtained is transferred to debit side of the bills receivable account.

Maintaining a bills receivable book has following benefits:

1. All information pertaining to the bills receivable, such as due date, amount, etc., get recorded in one place, thereby makes it easy to access the records.

2. Likelihood of fraud is greatly minimized as bills are recorded in one place.

3. Higher level of liability and obligation exists on the person maintaining the accounts. If any error is spotted, it can be rectified easily.

4. Time of the accountant is saved as recording of transactions are recurring and similar in nature.

5. As it is a particular book only dealing with bills receivable, it is easy to locate all details pertaining to a specific bill of exchange.

Q5. Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?

Maintaining bills payable book has following benefits:

1. Quick, efficient and accurate recording of business transactions.

2. Minimizes the chances of fraud as all the bills are recorded at one place

3. A high degree of accountability and answerability on part of the accountant is observed as all the transactions get verified by the same person which leads to easy detection and rectification of errors.

4. As information is documented by an individual, it improves the division of labour and efficiency of organization.

Procedure of posting to ledger:

The recordings from the Bills Payable Book are posted to the accounts of the creditors who received acceptance from the debtors. These books are then totaled periodically and credited to the Bills Payable Account in the ledger.

Q6. A bill of exchange must contain an unconditional promise to pay. Do you agree with a statement?

The Negotiable Instrument Act, 1881 defines bill of exchange as, “A bill of exchange is defined as 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.”

One of the most significant feature of a negotiable instrument is an unconditional order to pay. The drawee cannot add any conditions such as payment will be done only if debtors pay or business makes profit.

A bill of exchange must contain an unconditional order to pay for the following reasons:

1. To avoid any kind of conflict at the time of payment

2. To provide security to the creditor and also bound the debtor to pay the amount.

3. To comply with The Negotiable Instruments Act, 1881.

Twelve Marks Qs

Q1.Briefly explain the effects of dishonour and noting of a bill of exchange.

When the drawee of the bill of exchange is unable to complete the payment on the date of maturity of the bill, it is known as dishonour of bill of exchange. With this liability of the acceptor is re-established and he/she becomes a debtor again. To reflect the changes, the receipt of bill of exchange should be reversed.

The following entries will be made in books of holder/drawer (Nonpayment of noting charges):

Drawee A/c Dr.

To Bills Receivable A/c

(Bill of exchange dishonoured)

Entry in the books of drawee:

Bills Payable A/c Dr
To Drawer
(Bill of exchange dishonoured)

Notary public charges a fee for keeping proof a dishonoured bill. These charges are beared by the drawee of the bill.

Following piece of information are noted by the notary public.

1. Amount and date of the bill

2. Possible Reason for dishonouring of bill

3. Fees charged for Noting

Entries of noting charges in the books of drawer (Payment done for noting charges):

Drawee Dr.
To Bills Receivable A/c
To Cash A/c (Noting charges)
(Bill of exchange dishonoured and Noting charges paid)

In the books of drawee:

Bills Payable A/c Dr.
Noting charges A/c Dr
To Drawer
(Bill of exchange dishonoured and Noting charges due)

Q2. Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.

The following steps discusses the procedure of calculating bill of exchange maturity date:

1. Determine the due date of the bill as per terms of bills of exchange.

2. Grace period of three days must be added to the due date to arrive at maturity date.

For e.g., a bill having due date of 30 days (a month) is drawn on 1^st August then due date is 1^st September. Adding 3 grace period we arrive at bill maturity and payment due date which is on 4^th October.

Calculation of Days of grace period depends on these situations:

1. Known Holidays: If due date for payment falls on a national holiday or on a Sunday, then payment need to be processed the following day. The following examples will make it easier to understand.

1. A bill that is drawn on 23^rd December with due date of 23^rd January, adding the grace period (3 days) the maturity date comes to 26^th January. However, as 26^th January is a national holiday; so, 25^th January becomes the due date for payment.
2. A bill is drawn on 1^st June with maturity period of a month, the due date arrived is 1^st July. On adding 3 days of grace, the payment due date is 4^th July. However, if 4^th July is a Sunday, in this case payment needs to be completed on 3^rd July.

2. Unexpected holidays: If due date for payment falls on an holiday due to emergency, then the next day becomes the day on which payment needs to be done. For example, a bill drawn on 1^st May with a term of 20 days, then, adding grace period of 3 days, the payment due date becomes 24^th May. But, if a nationwide strike gets declared on 24^th May, then 25^th May is the new due date for the payment of the bill as per rules.

Q3. 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.

The transactions are journalized below:

Journal entries in the Books of Rao

Date	Particulars	L.F.	Debit Amount₹	Credit Amount₹
01 Jan	Cash A/c Dr. To Reddy (Cash received from Reddy)		5,000	5,000
01 Jan	Bills Receivable A/c Dr. To Reddy (Bill received for 30 days accepted by Reddy)		5,000	5,000
03 Feb	Cash A/c Dr. To Bills Receivable A/c (Reddy’s acceptance met on due date)		5,000	5,000

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

Q4. 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.

The necessary journal entries are as follows:

Journal entries in the Books of Parvati

Date	Particulars	L.F.	Debit Amount₹	Credit Amount₹
2016 01 Jan	Shankar Dr. To Sales A/c (Sold goods to Shankar)		8,000	8,000
01 Jan	Bills Receivable A/c Dr. To Shankar (Shankar sent Promissory Note forthree months)		8,000	8,000
05 Apr	Cash A/c Dr To Bills Receivable A/c (Cash received for Promissory Note one day after theMaturity date on account of holiday declared by Govt.)		8,000	8,000

Journal entries in the Books of Shankar

Date	Particulars	L.F.	Debit Amount₹	Credit Amount₹
2016 01 Jan	Purchases A/c Dr To Parvati (Goods purchased from Parvati)		8,000	8,000
01 Jan	Parvati Dr To Bills Payable A/c (Promissory note for three months sent to Parvati)		8,000	8,000
05 Apr	Bills Payable A/c Dr To Cash A/c (Cash paid on maturity of the promissory note)		8,000	8,000

Q5. 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.

The transactions are journalized as follows:

Journal entries in the Books of Vishal 

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

Journal entries in the Books of Manju 

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

Q5. 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.

The entries are shown below:

Journal entries in the Books of Jimmi

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

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

Journal entries in the Books of John

Date	Particulars	L.F	Debit  Amount ₹	Credit Amount₹
2016 01 Feb	Purchases A/c Dr. To Jimmi (Goods purchased from Jimmi)		15,000	15,000
01 Feb	Jimmi Dr. To Bank A/c (Cheque payment done to Jimmi)		5,000	5,000
01 Feb	Jimmi Dr. To Bills Payable A/c (Bill drawn by Jimmi acknowledge		10,000	10,000
15 Mar	Bills Payable A/c Dr. To Bank A/c (Payment of bill done on maturity to bank)		10,000	10,000

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

Q6. 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.

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. To Sales A/c ( Goods traded to Bhagwan)		30,000	30,000
15 Jan	Bills Receivable A/c Dr. To Bhagwan A/C (Three bills of ₹ 10,000 each, received from Bhagwan)		10,000	10,000
15 Jan	Ratna Dr. To Bills Receivable A/c (₹ 10,000 bill from Bhagwan endorsed to Ratna)		10,000	10,000
15 Jan	Bank A/c Dr. Discount A/c Dr. To Bills Receivable A/c (B/R discounted)		9,850 150	10,000
19 Feb	Cash A/c Dr. To Bills Receivable A/c (First bill for one month paid by Bhagwan, on due date)		10,000	10,000

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

Dr Cr

Date	Particulars	L.F.	Debit Amount₹	Credit Amount₹
2015 15 Jan	Purchases A/c Dr. To Kartar (Good bought from Kartar on credit)		30,000	30,000
15 Jan	Kartar Dr. To Bills Payable A/c (Three bill ₹ 10,000 each drawn by Kartar–Accepted and  returned them to Kartar)		30,000	30,000
19 Feb	Bills Payable A/c Dr. To Cash A/c (First bill payment completed on due date)		10,000	10,000
19 Mar	Bills Payable A/c Dr. To Bank A/c (Second bill payment completed on due date to Ratna)		10,000	10,000
19 Apr	Bills Payable A/c Dr. To Bank A/c (Third bill payment completed on due date to bank)		10,000	10,000

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

Q7. 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.

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. To Sales A/c (Goods traded to Sunil)		30,000	30,000
01 Jan	Cash A/c Dr. Discount Allowed A/c Dr. (50% due from Sunil received and2% Cash Discount allowed to Sunil)		14,700 300	15,000
01 Jan	Bills Receivable A/c Dr. To Sunil (Promissory note established for 20 days from Sunil)		15,000	15,000
23 Jan	Cash A/c Dr. To Bills Receivable A/c (Cash received from Sunil before Maturity)		15,000	15,000

Journal Entries in the Book of Sunil

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

Q8. 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.

The entries are shown below:

(i) Books of Darshan

Date	Particulars	L.F.	Debit  Amount ₹	Credit  Amount ₹
2016 08 Jan	Varun Dr. To Sales A/c (Goods traded to Varun)		40,000	40,000
08 Jan	Bills Receivable A/c Dr. To Varun (Bill of Exchange duly accepted and returned by Varun)		40,000	40,000
11 Mar	Cash A/c Dr. To Bills Receivable A/c (Payment for B/R received for B/R)		40,000	40,000

Books of Varun

Date	Particulars	L.F	Debit	Credit₹
2016 08 Jan	Purchases A/c Dr. To Darshan (Goods purchased from Darshan)		40,000	40,000
08 Jan	Purchases A/c Dr. To Darshan (Goods purchased from Darshan)		40,000	40,000
08 Jan	Darshan Dr. To Bills Payable A/c (Bill of two months accepted for Darshan)		40,000	40,000
11 Mar	Bills Payable A/c Dr To Cash A/c (Varun cleared his payment on the due date)		40,000	40,000

(ii) Books of Darshan

Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016 08 Jan	Varun Dr. To Sales A/c (Goods traded to Varun)		40,000	40,000
08 Jan	Bills Receivable A/c Dr. To Varun (B/R received from Varun for two months)		40,000	40,000
08 Jan	Bank A/c Dr. Discount A/c Dr. To Bills Receivable A/c (B/R discounted from bank @ 6 p.a.)		39,600 400	40,000

Books of Varun

Date	Particulars	L.F.	Debit	Credit₹
2016 08 Jan	Purchases A/c Dr. To Darshan (Goods purchased from Darshan)		40,000	40,000
08 Jan	Purchases A/c Dr. To Darshan (Goods purchased from Darshan)		40,000	40,000
08 Jan	Darshan Dr. To Bills Payable A/c (Bill of two months accepted for Darshan)		40,000	40,000
11 Mar	Bills Payable A/c Dr To Bank A/c (Varun cleared his payment on thedue date)		40,000	40,000

(iii) Books of Darshan

Date	Particulars	L.F.	Debit  Amount ₹	Credit  Amount
2016 08 Jan	Varun Dr. To Sales A/c (Goods traded to Varun)		40,000	40,000
08 Jan	Bills Receivable A/c Dr. To Varun A/c (Varun’s approval received for two months)		40,000	40,000
08 Jan	Suresh A/c Dr. To Bills Receivable A/c (Varun’s approval endorsed in favour of Suresh)		40,000	40,000

Books of Varun

Date	Particulars	L.F	Debit ₹	Credit₹
2016 08 Jan	Purchases A/c Dr. To Darshan (Goods purchased from Darshan)		40,000	40,000
08 Jan	Darshan Dr. To Bills Payable A/c (Bill drawn by Darshan accepted for two months)		40,000	40,000
11 Mar	Bills Payable A/c Dr. To Cash A/c (Bill paid to the holder of bill)		40,000	40,000

(iv) Books of Darshan

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

Books of Varun

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

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