**Bills of Exchange Questions and Answers**

This post contains Bills of Exchange Questions and Answers, on various topics, including calculation of due dates, Journal entries for Bills of exchange, calculation of value received by drawer and drawee etc.

**CALCULATION OF DUE DATE – TERM GIVEN IN MONTHS**

**Bills of Exchange Questions and Answers – Question 1:**

A Bill of Exchange is drawn on 1 March 2017 . Term of the Bill was 4 months . The due date of the Bill will be________ ?

**Explanation : **

Due date of Bill will be:

Date of drawing the Bill + Tenure of the Bill + Grace period

1 March 2017 + 4 months + 3 Days

04 July 2017

**CALCULATION OF DUE DATE – AFTER SIGHT**

**Bills of Exchange Questions and Answers – Question 2:**

A Bill of Exchange is drawn on 1 January 2017 . The term of the Bill was 30 Days after sight . The date of acceptance is 8 January 2017 . The due date of the Bill will be________ ?

**Explanation:**

When a Bill is payable after sight, the due date shall be calculated from the DATE OF ACCEPTANCE of the Bill, as against the date on which the Bill was Drawn . 3 grace days shall also be available additionally from this date.

Accordingly, the Due date of Bill will be:

Date of accepting the Bill + Tenure of the Bill + Grace period

8 January 2017 + 30 Days + 3 Days

10 February 2017

**CALCULATION OF DUE DATE – TERM GIVEN IN NUMBER OF DAYS**

**Bills of Exchange Questions and Answers – Question 3:**

A Bill of Exchange is drawn on 1 April 2017 . Term of the Bill was 30 Days . The due date of the Bill will be________ ?

**Explanation:**

Due date of Bill will be:

Date of drawing the Bill + Tenure of the Bill + Grace period

1 April 2017 + 30 Days + 3 Days

04 May 2017

**JOURNAL ENTRY FOR RECEIPT OF BILL OF EXCHANGE **

**Bills of Exchange Questions and Answers -Question 4:**

A Bill for Rs. 10000 was drawn by A and accepted by P ,and is payable after 3 months. What would be the Journal entry for receipt of Bill of exchange in the books of A ?

**Explanation:**

Bills Receivable A/c Dr. 10000

To P A/c 10000

**RECEIPT OF AMOUNT AGAINST BILL OF EXCHANGE -WHEN BILL IS RETAINED TILL MATURITY**

**Bills of Exchange Questions and Answers -Question 5:**

A Bill of Rs. 10000 was drawn by X and accepted by Y ,and is payable after 2 months. What would be the Journal entry for receipt of amount against Bill of exchange in the books of X if Bill was met on due date ?

**Explanation:**

Cash A/c Dr. 10000

To Bills Receivable A/c 10000

**RECEIPT OF AMOUNT AGAINST BILL OF EXCHANGE -WHEN BILL IS RETIRED UNDER REBATE (BEFORE MATURITY)**

**Bills of Exchange Questions and Answers -Question 6:**

A Bill of Rs. 12000 was drawn by A and accepted by D ,and is payable after 2 months. D retired the Bill under rebate of 5 % p.a. 1 month before the maturity .What would be the Journal entry for receipt of amount against Bill in the books of A ?

**Explanation:**

To Bills Receivable A/c 12000

Working note: Calculation of Rebate amount

Rebate amount-

Bill Amount x Rebate x No. of months before maturity

12000 x 5 % x

50

**JOURNAL ENTRY FOR BILL OF EXCHANGE- IN THE BOOKS OF DRAWEE**

**Bills of Exchange Questions and Answers – Question 7:**

A Bill of Rs. 13000 was drawn by Anil and accepted by Sunil ,and is payable after 1 months. What would be the Journal entry in the books of Sunil for issue of Bill of exchange by Anil ?

**Explanation:**

Anil A/c Dr. 13000

To Bills Payable A/c 13000

**JOURNAL ENTRY – WHEN BILL OF EXCHANGE ISSUED BY DRAWER PAID ON DUE DATE**

**Bills of Exchange Questions and Answers – Question 8:**

A Bill of Rs. 10000 was drawn by P and accepted by Q ,and is payable after 1 months. What would be the Journal entry in the books of Q for the amount paid by him if Bill was met on due date ?

**Explanation:**

Bills Payable A/c Dr. 10000

To Cash A/c 10000

**JOURNAL ENTRY – WHEN BILL OF EXCHANGE ISSUED BY DRAWER PAID BEFORE THE DUE DATE**

**Bills of Exchange Questions and Answers – Question 9:**

A Bill of Rs. 10000 was drawn by A and accepted by B ,and is payable after 3 months. B retired the Bill under rebate of 6 % p.a. 1 month Before the maturity .What would be the Journal entry in the books of B ?

**Explanation:**

Bills Payable A/c Dr. 10000

To Cash A/c 9950

To Rebate A/c 50

Working note: Calculation of Rebate amount

Bill Amount x Rebate x No. of months before maturity

10000 x 6 % x

50

**CALCULATION OF VALUE RECEIVED BY DRAWER AND DRAWEE**

**Bills of Exchange Questions and Answers – Question 10:**

X draws a Bill for Rs. 36000 on Y for 4 months. He gets it discounted form Bank @ 7 % p.a. They agreed to share the proceeds equally. What is the amount received by X ?

**Explanation:**

Total value of Bill = 36000

Discounting charges = 36000 x 7 % x

Discounting charges = 840

Remaining amount of the Bill = 36000 – 840

= 35160

Since the proceeds were shared equally, therefore Amount received by X =

= 17580

**CALCULATION OF DISCOUNT AMOUNT**

**Bills of Exchange Questions and Answers – Question 11:**

A Bill of Rs. 15000 was drawn by C and accepted by P ,and is payable after 4 months . P discounted the Bill with Bank @ 4 % p.a. The discounting charges will be ?

**Explanation:**

When a Bill is discounted with the Bank, the Bank charges an amount called Discounting charges. These could be a flat amount or a percentage of the Bill Amount.

Discounting charges =

Bill Amount x Discount rate x Time period

15000 x 4 % x

200

**JOURNAL ENTRY – DISCOUNTING OF BILL OF EXCHANGE IN THE BOOKS OF DRAWER**

**Bills of Exchange Questions and Answers – Question 12:**

A Bill of Rs. 50000 was drawn by Q and accepted by G ,and is payable after 2 months . Q discounted the Bill with Bank @ 9 % p.a. On the due date G paid the required amount. What would be the Journal entry for discounting the Bill with the Bank in the books of Q ?

**Explanation:**

Bill Amount x Discount rate x Time period

50000 x 9 % x

750

Amount received in Bank = Bill Amount( –) Discount = 50000 (-) 750 = 49250

Journal entry would be:

Bank A/c Dr. 49250

Discounting Charges A/c Dr. 750

To Bills Receivable A/c 50000

Note: On payment of the Bill(i.e. on due date) no entry will be made in the books of Q since Bill got discounted by Q with his Bank .

**DISCOUNTING OF BILL OF EXCHANGE IN THE BOOKS OF DRAWEE**

**Bills of Exchange Questions and Answers – Question 13:**

A Bill of Rs. 90000 was drawn by L and accepted by X ,and is payable after 3 months . L discounted the Bill with Bank @ 8 % p.a. On the due date X paid the required amount. What would be the Journal entry for discounting the Bill with the Bank in the books of X .

**Explanation:**

Discount =

Bill Amount x Discount rate x Time period

90000 x 8 % x

1800

Journal entry would be:

No entry required

Note: Discounting of Bill is an accounting event in the books of L . There would be no entry required in the books of X in this regard.

**JOURNAL ENTRY IN THE BOOKS OF DRAWER – ENDORSEMENT OF BILL IN FAVOUR OF CREDITOR**

**Bills of Exchange Questions and Answers – Question 14:**

A Bill of Rs. 9000 was drawn by Rohit and accepted by Arvind ,and is payable after 2 months. Rohit endorsed the Bill in favour of his creditor DC & Co. in settlement of their debt of Rs. 9900 . What would be the Journal entry for endorsement of Bill in the books of Rohit ?

**Explanation:**

Journal entry would be:

DC & Co. A/c Dr. 9900

To Bills Receivable A/c 9000

To Discount Received A/c 900

Note: Bills Receivable A/c is credited because Bills Receivable , being an asset has been endorsed (transferred) in the favour of DC & Co.

DC & Co. A/c is debited because a liability has been paid in full after agreed settlement .

**JOURNAL ENTRY IN THE BOOKS OF ENDORSEE – ENDORSEMENT OF BILL IN FAVOUR OF CREDITOR**

**Bills of Exchange Questions and Answers – Question 15:**

A Bill of Rs. 65000 was drawn by Anil and accepted by Ajay ,and is payable after 1 months. Anil endorsed the Bill in favour of his creditor ABC & Co. in settlement of their debt of Rs. 71500 . What would be the Journal entry for endorsement of Bill in the books of ABC & Co.

**Explanation:**

Journal entry would be:

Bills Receivable A/c Dr. 65000

Discount A/c Dr. 6500 ( 71500 (-) 65000 )

To Anil A/c 71500

Working note:1

Bank A/c Dr. 65000

To Bills Receivable A/c 65000

The above entry would be pass when Ajay pays the amount of the Bill on the due date .

**JOURNAL ENTRY IN THE BOOKS OF DRAWER – BILL SENT TO THE BANK FOR COLLECTION**

**Bills of Exchange Questions and Answers – Question 16:**

A Bill of Rs. 8000 was drawn by R and accepted by F ,and is payable after 3 months. R gave the Bill to his banker for collection. What would be the Journal entry for Bill sent for collection in the books of R ?

**Explanation:**

Bills sent for Collection A/c Dr. 8000

To Bills Receivable A/c 8000

**JOURNAL ENTRY IN THE BOOKS OF DRAWER – BILL SENT TO THE BANK FOR COLLECTION COLLECTED BY BANK AT MATURITY**

**Bills of Exchange Questions and Answers – Question 17**:

A Bill of Rs. 52000 was drawn by K and accepted by Z ,and is payable after 2 months. K gave the Bill to his banker for collection. On due date, Bill is honoured. What would be the Journal entry for Bill collected by the Bank at maturity in the books of K ?

**Explanation**:

Bank A/c Dr. 52000

To Bills sent for Collection A/c 52000

**JOURNAL ENTRY IN THE BOOKS OF DRAWER – DISHONOURED OF BILL WHEN DRAWER IS THE HOLDER OF THE BILL**

**Bills of Exchange Questions and Answers – Question 18:**

A Bill of Rs. 7000 was drawn by H and accepted by S ,and is payable after 6 months. The Bill was dishonoured on the due date. H paid Rs. 500 as noting charges. What would be the Journal entry for dishonour of Bill in the books of H ?

**Explanation:**

S A/c Dr. 7500

To Bills Receivable A/c 7000

To Cash A/c 500

**JOURNAL ENTRY IN THE BOOKS OF DRAWEE – DISHONOURED OF BILL WHEN DRAWER IS THE HOLDER OF THE BILL**

**Bills of Exchange Questions and Answers – Question 19:**

A Bill of Rs. 10000 was drawn by W and accepted by A ,and is payable after 3 months. The Bill was dishonoured on the due date. W paid Rs. 1000 as noting charges. What would be the Journal entry for dishonour of Bill in the books of A ?

**Explanation**

Bills Payable A/c Dr. 10000

Noting Charges A/c Dr. 1000

To W A/c 11000

**JOURNAL ENTRY IN THE BOOKS OF DRAWER – DISHONOURED OF BILL WHEN BANK IS THE HOLDER OF THE BILL**

**Bills of Exchange Questions and Answers – Question 20:**

A Bill of Rs. 10000 was drawn by Bhanu and accepted by Ankush ,and is payable after 4 months. Bhanu discounted the Bill with his Bank at 9900 . On the due date, the Bill was dishonoured and Bank paid Rs. 300 as noting charges. What would be the Journal entry for dishonour of Bill in the books of Bhanu ?

**Explanation:**

Ankush A/c Dr. 10300 ( 10000 + 300 )

To Bank A/c 10300

Note: Ankush ‘s A/c is debited since the Bill was dishonoured on the due date, and Bhanu will recover the amount along with noting charges paid by Bank from Ankush .

**JOURNAL ENTRY IN THE BOOKS OF DRAWEE – DISHONOURED OF BILL WHEN BANK IS THE HOLDER OF THE BILL**

**Bills of Exchange Questions and Answers – Question 21:**

A Bill of Rs. 11300 was drawn by D and accepted by V ,and is payable after 4 months. D discounted the Bill with his Bank at 11000 . On the due date, the Bill was dishonoured and Bank paid Rs. 200 as noting charges. What would be the Journal entry for dishonour of Bill in the books of V ?

**Explanation:**

Bills Payable A/c Dr. 11300

Noting Charges A/c Dr. 200

To D A/c 11500

**JOURNAL ENTRY IN THE BOOKS OF DRAWER – DISHONOURED OF BILL WHEN ENDORSEE IS THE HOLDER OF THE BILL**

**Bills of Exchange Questions and Answers – Question 22:**

A Bill of Rs. 12000 was drawn by X and accepted by Y ,and is payable after 1 months. X endorsed the Bill to his creditor, Z . On the due date, the Bill was dishonoured and Z paid Rs. 200 as noting charges. What would be the Journal entry for dishonour of Bill in the books of X ?

**Explanation:**

Y A/c Dr. 12200 ( 12000 + 200 )

To Z A/c 12200

**JOURNAL ENTRY IN THE BOOKS OF ENDORSEE- DISHONOURED OF BILL WHEN ENDORSEE IS THE HOLDER OF THE BILL**

**Bills of Exchange Questions and Answers – Question 23:**

A Bill of Rs. 7100 was drawn by H and accepted by R ,and is payable after 4 months. H endorsed the bill to his creditor, D . On the due date, the Bill was dishonoured and D paid Rs. 900 as noting charges. What would be the Journal entry for dishonour of Bill in the books of D ?

**Explanation:**

H A/c Dr. 8000 ( 7100 + 900 )

To Bills Receivable A/c 7100

To Cash A/c 900

**JOURNAL ENTRY IN THE BOOKS OF DRAWEE- RENEWAL OF BILL**

**Bills of Exchange Questions and Answers – Question 24:**

A Bill of Rs. 9000 was drawn by Z and accepted by A ,and is payable after 4 months. Before the due date, A requests Z to cancel the Bill and to draw a fresh Bill on him for Rs. 9750 for a further period of 2 months. What would be the Journal entry for Renewal of Bill in the books of A ?

**Explanation:**

Entry for issue of new bill

Z A/c Dr. 9750

To Bills Payable A/c 9750

Entry for cancellation of last bill

Bills Payable A/c Dr. 9000

To Z A/c 9000

**JOURNAL ENTRY IN THE BOOKS OF DRAWER- INTEREST ON RENEWAL OF BILL**

**Bills of Exchange Questions and Answers – Question 25:**

A Bill of Rs. 8000 was drawn by R and accepted by S ,and is payable after 3 months. Before the due date, S requests R to cancel the Bill and to draw a fresh Bill on him for Rs. 9200 for a further period of 1 months. What would be the Journal entry for interest charged on Renewal of Bill in the books of R .

**Explanation:**

S A/c Dr. 1200 ( 9200 – 8000 )

To Interest A/c 1200

**CALCULATION OF INTEREST-RENEWAL OF BILL**

**Bills of Exchange Questions and Answers – Question 26:**

On 01.01.2016 X draws a Bill on Y for Rs. 20000 . At maturity, Y requests X to accept Rs. 6000 immediately and drew upon him another Bill for the remaining amount for 1 months along with interest@ 6 % p.a. You are required to calculate the amount of interest ?

**Explanation:**

Interest will be charged on the balance amount:

( Bill Amount – Amount paid ) x Interest rate x Time period

( 20000 – 6000 ) x 6 % x

14000 x 6 % x

70

**RECOVERY OF AMOUNT-DRAWEE BECOMES INSOLVENT**

**Bills of Exchange Questions and Answers – Question 27:**

L draw a Bill of Rs. 31000 and N accepts it. After this, N becomes insolvent and only 45 paisa in a rupee could be recovered from N estate. What is the amount that has been be recovered?

**Explanation:**

Total amount to be recovered by L from N is Rs. = 31000

Out of this only 45 % is recoverable

Deficiency will be 55 %

Hence the recoverable amount will be 31000 x 45 %

13950

**RECOVERY OF AMOUNT-DRAWEE BECOMES INSOLVENT**

**Bills of Exchange Questions and Answers – Question 28:**

K draw a Bill of Rs. 75000 on X for 1 months. At maturity, the Bill was returned dishonoured, noting charges were Rs. 5000 . 10 paisa in a rupee could be recovered from X estate. The amount of deficiency to be recorded on insolvency in books of X will be ?

**Explanation:**

Total amount to be recovered by K from X after dishonour of Bill is Rs. = 80000 ( 75000 + 5000 )

Out of this only 10 % is recoverable

Deficiency will be 90 %

Hence the total deficiency will be 80000 x 90 %

72000

**JOURNAL ENTRY IN THE BOOKS OF DRAWER-DRAWEE BECOMES INSOLVENT**

**Bills of Exchange Questions and Answers – Question 29:**

K draw a Bill of Rs. 70000 and Y accepts it. After this, Y becomes insolvent and only 90 paisa in a rupee could be recovered from Y estate. What would be the Journal entry for amount received from Y in the books of K ?

**Explanation:**

Out of this only 90 % is recoverable

Deficiency will be 10 %

Hence the recoverable amount will be 70000 x 90 %

63000

Journal entry would be:

Cash A/c Dr. 63000

Bad debts A/c Dr. 7000

To Bills Receivable A/c 70000

**JOURNAL ENTRY IN THE BOOKS OF DRAWEE-DRAWEE BECOMES INSOLVENT**

**Bills of Exchange Questions and Answers- Question 30:**

Vijay draw a Bill of Rs. 40000 and Ankush accepts it. After this, Ankush becomes insolvent and only 60 paisa in a rupee could be recovered from Ankush estate. What would be the Journal entry for amount paid to Vijay in the books of Ankush ?

**Explanation:**

Total amount to be recovered by Vijay from Ankush is Rs. = 40000

Out of this only 60 % is recoverable

Deficiency will be 40 %

Hence the recoverable amount will be 40000 x 60 %

24000

Journal entry would be:

Bills Payable A/c Dr. 40000

To Cash A/c 24000

To Profit and Loss A/c 16000

**Learn More..**

**Renewal of Bill of Exchange****Bill of Exchange****Accounting for Bills of Exchange****Dishonour of Bill Accounts****Calculation of due date of bill of exchange**

**Practice Thousands of Accounts Class 11 Questions**

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