bill of exchange 3
TRANSCRIPT
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Treatment
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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
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Drawer who makes the Bill grants credit
Drawee _---
who accepts the bill availsthe credit
Payee---to whom the amount is to bepaid
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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
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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
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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
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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.
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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
Dt Particulars lf Dr Cr
Purchases A/C.....Dr To Supplier
Supplier A/C........Dr To B/P
B/P A/C.......Dr To Cash A/C
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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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DRAWERS BOOK DRAWEES BOOK
Dt Particulars lf Dr Cr
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
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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
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DRAWERS BOOK DRAWEES BOOK
Dt Particulars lf Dr Cr
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
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
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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
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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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DRAWERS BOOK DRAWEES BOOK
Dt Particulars lf Dr Cr
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
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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
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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