BILLS OF EXCHANGE

1) Ajay drew a bill upon Vijay for ₹5000 due after 3months. Vijay accepted the same on
1st February ,2018. Ajay discounted it on 4th February @ 5%p.a.On due date the bill was
honoured.Show the journal entries in the books of Ajay and Vijay.

2) Ranjit sold goods to Akash for ₹30000 for which a bill for 3 months was drawn and it
was accepted by Akash on 1st January 2018.Ranjit endorsed the bill to Nihar who
discounted the same with his bank on 4th January for ₹29600.At maturity the bill was
dishonoured and noting charge incurred amounted to ₹300. Show necessary Journal
entries in the books of Ranjit ,Akash and Nihar.

3) Adrew upon B the following bills,B accepted and returned to A on the same date. (i)
On 1.4.18 for ₹12000 for 3 months,A discounted the bill on 4.5.18 @ 6%p.a (ii) On 1.6.18
for ₹4500 for 3 months,A discounted the bill on 4.6.18 @ 5%p.a (iii) On 1.7.18 for ₹9000
for 2 months, A discounted the bill on 1.8.18 @5%p.a Find the amount of discount.

4) X accepted a bill drawn by Y for ₹18000.Before maturity X proposed to pay ₹1200 in

cash and accepted a new bill at 3 months for the balance plus interest of ₹210.Y agreed.
Show the journal entries in the books of X and Y.

5) On 1st April 2018 Ramesh purchased goods from Suresh costing ₹ 40,000.On the
same date Suresh drew upon Ramesh a bill for the amount at 2 months and Ramesh
accepted the same.On 4th April Suresh discounted the bill a this bank @ 12%p.a.On due
date,Ramesh told Suresh that he was not in a position to pay the full amount and
requested Suresh to accept ₹ 20,000 in cash and a fresh bill for the remaining amount
for 2 months together with interest @ 15%p.a,Suresh agreed.The second bill was duly
met. Give journal entries in the books of Suresh.

6) On 1.04.18 P drew a bill for ₹40000 on Q for 3 months.Q accepted it and returned it
to P.P then endorsed the bill to R,his creditor,who again endorsed the same to S.S
discounted the bill @ 6%p.a.On maturity, the bill was duly honoured by Q. Show the
Journal entries and Ledger Accounts in the books of all parties.

7) On 1st July 2018 A draws on B,who owed him ₹10,000,two bills ,one for ₹6000 for 3
months and another for ₹4000 for 2 months,B accepts these bills. A endorses on 3rd
July the first bill to his creditor in full settlement of his account of ₹6200,and discounts
the second bill on 4th July,with his banker @ 12%p.a.The first bill was duly paid at
maturity but the second bill was dishonoured and ₹60 was paid as noting charges.On
5th September,A draws and B accepts a third bill for 3 months for ₹4150 in lieu of the
dishonoured bill.This bill was duly paid at maturity. Give Journal entries in the books of
both A and B.
8) For value received, Chitra drew upon Ritu a bill of ₹20000 at 3 months,on 1.4.18.
Ritu duly accepted the bill.Chitra discounted the bill immediately @ 8%p.a.At the
maturity the bill was dishonoured,noting expense incurred being ₹60. Ritu proposed
that she would pay ₹8000 and the noting expense immediately in cash and would accept
three bills of equal amount at 2 months,4 months and 6months respectively, covering
the balance and interest @ 12%p.a, Chitra agreed. At maturity of the new acceptances,
the bills were duly met. Show the journal entries ledger accounts in the books of Chitra.

9) Aman sold goods to Manan worth ₹24000 at a trade discount of 10%.He drew on
1.4.17 four bills of equal amounts which Manan accepted. The bills were for 2, 3, 4 and 5
months respectively. Aman endorsed the bill at 2 months to Kuldeep in full settlement
of his claim of ₹5500; sent the bill at 3 months on due date for collection; discounted the
bill at 4 months for ₹5292 on 4.4.17 and held the bill at 5 months till maturity. All the
bills were dishonoured on the respective maturity dates. Show the Journal entries and
ledger accounts in the books of Aman.

10) M sold goods to N for ₹10000 on 1.7.18. N immediately accepted a bill for ₹6000 for
a period of 3 months and sent a bank draft for the balance amount. M discounted the
bill on 4.8.18 @ 10%discount p.a. On due date the bill was dishonoured, noting charges
₹50 paid by bank.N paid a sum of ₹2000 in cash and accepted another bill for the
amount due for a further period of 2 months together with interest @ 12%p.a.On due
date the bill was honoured. Give journal entries in the books of M.

11) On 1st November, 2018 Nirmala draws a three months bill of exchange for ₹60000
on her debtor, Smriti, who accepts it on the same date.On 4th November, Nirmala
discounted the bill at her bank @ 4%p.a.The bill was dishonoured on maturity,the
noting charge incurred were ₹100. Smriti immediately makes an offer to Nirmala to pay
him ₹20100 in cash and to settle the balance by agreeing to accept one bill for ₹24000 at
one month and the other for the balance at three months, the latter including interest @
6%p.a for both the bills. Nirmala agreed to the proposal. The bill for ₹24000 was duly
met at maturity but the other bill was dishonoured at maturity. Prepare Smriti’s
Account and Bills Receivable Account in the ledger of Nirmala.

12) On 1st March, 2018 A buys goods from B valued ₹25000. Instead of paying cash he
agrees to give B a bill of exchange, at 4 months, the amount of the bill includes interest
@ 6%p.a. On the due date B is only able to find ₹18475 cash, and he arranges with B for
the retirement of the bill in consideration of payment of this amount and a substituted
bill at 4 months for the balance plus interest @ 6%p.a. Give Journal entries and prepare
B’s Account in the books of A.

13) Debayan draws two bills of exchange on 1.4.18 for ₹18000 and ₹30000 for 2months
and 3 months respectively. These bills are accepted by Tarun. On 4.6.18 Tarun request
Debayan to new the first bill with interest @ 18%p.a for a period of 2 months. Debayan
agrees to the proposal. On 20.6.18Tarun retires the acceptance for ₹30000,the discount
being ₹300.Before the due date of the renewed bill, Tarun be comes insolvent and only
50 paise in a rupee could be recovered from his estate. Pass the Journal entries and also
show the ledger accounts in the books of Debayan.

14)On 1st July2018 Naman purchased goods from Bhuvan for ₹60000 on credit.On 4th
July, Naman sold the goods to Sandeep for ₹80000 also on credit. For this purpose, he
drew two bills on Sandeep for ₹ 40,000 each on 5th July, payable after 1 month and 2
months respectively. On 8th July Naman endorsed one bill in favour of Bhuvan along
with a cheque of ₹20000 to settle the amount due to him. However the second bill was
held by him till maturity. On due dates, both the bills were dishonoured. Show the
Journal entries in the books of Naman and Sandeep.

15)In the books of Ram there was a balance of ₹12000 due from Laksman on 31st March
2018, which was written off as bad debt inc losing of books on that date. On 15th July
2018 Laksman paid cash ₹10000 in full settlement of his dues. Further transaction took
place between Ram and Laksman as follows: 4th August 2018: Ram sold goods to
Laksman valued at ₹25000 which were paid by cheque ₹4000 and a bill of exchange
₹21000 at 1 month. Ram discounted the bill for ₹2000. 7th September: Laksman’s bill
was dishonoured and Ram was called upto to take it up. This he did by paying noting
charges of ₹100. 8th September: Laksman met his obligation for ₹21000 with a bill at 2
months for the same amount, paid cash for noting charges on the old bill and interest of
₹200 on the new bill. 11th November: Laksman paid cash ₹11000 and accepted a fresh
bill at 2 months for ₹10400 including interest. 11th December: Laksman became
insolvent and paid final dividend of 50paise in a rupee. Show necessary Journal entries
in the books of Ram and Ram account in the books of Laksman.

16)On 15th January 2019, A sold goods to B for ₹30000. B paid ₹6000 in cash and
accepted three bills of exchange for the remaining amount.1st bill for ₹7000 for 1 month,
2nd bill for ₹8000 for 2 months and 3rd bill for ₹9000 for 3months. On 20th
January2019 A endorsed the 1st bill to his creditor C to clear his account of ₹7100,
discounted the 2nd bill on 22nd January for ₹7920 and retained the 3rd bill till
maturity. 1st bill was met on maturity.2nd bill was dishonoured on due date ₹100 being
paid for noting charges. A charged B ₹150 for interest and drew on him a 4th bill for
₹8250 for 3 months. 3rd bill was met on due date. But before the due date of 4th bill B
was declared insolvent and A got only 40 paise in a rupee. Give Journal entries to record
the above transactions in the books of A.

LEDGER
1) Prepare the Cash Account and Balance it from the following transactions: (a) Brought
capital in cash ₹25000 (b) Received interest on investments ₹37000 (c) Sold goods for
cash ₹152500 (d) Paid ₹82500 (e) Purchased goods for cash ₹75000 (f) Paid electric bill
₹6000 (g) Paid all cash in to bank except ₹25000

2) From the following particulars prepare Machinery Account: (a) Machinery purchased
₹80000 (b) Installation charges ₹10000 (c) Machinery sold ₹7000 (d) Apart of
machinery worth ₹1500 broke away (e) Machinery again purchased ₹8000 (f)
Machinery discarded ₹5000 (g) Machinery sold ₹4500

3) Write Kusum’s account in the books of Navin (a) Navin sold goods to Kusum on
credit for ₹3000 and all owed her a trade discount @ 10% on 3.07.18 (b) Kusum
returned defective goods worth ₹5000 on 5.07.18 (c) Kusum settled her account in full
by paying only a cheque for ₹2200 on 8.07.18 (d) Cheque received from Kusum was
returned dishonoured by the bank on 13.07.18 (e) Navin sold goods to Kusum on credit
₹1200 on 18.07.18 (f) Kusum paid cash ₹1500 in lieu of the dishonoured cheque as part
payment on 23.07.18 (g) Kusum’s business was dissolved and it became impossible to
recover the dues from her, her account was closed on 29.07.18

4) X, a businessman, entered into the following transactions with Y. Draft the ledger
account of Y as it would appear in the books of X and balance the same: 2018 Oct 1
Opening debit balance of Y ₹ 18000 . Sold goods to Y @ 10% trade discount ₹ 25000 Y
returned goods ₹ 5000

12 Sold goods to Y ₹ 10000 16 Received a cheque from Y ₹ 10000 20 Y’s cheque

dishonoured Y became insolvent and X realized from his assets ₹27500

5) Post the following transactions in Ledger in the books of Mr.Toshniwal: March 1,2019
Debitbalances: Cash in hand ₹22000, Cash at Bank ₹41000, Stock ₹30,000, Furniture
₹10000, Building ₹ 50000, Debtors- Sunil ₹10000, Rajesh ₹12000, Kanchan ₹16000