Bills of Exchange and Promissory NotesQ-1 | Bills of Exchange and Promissory NotesQuestion 5098 of 26
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Suresh draws a bill for 15,000 on Anup on 15th April, 2020 for 3 months, which Anup returns to Suresh after accepting the same. Suresh gets it dis- counted with the bank for 14,700 on 18th April, 2020 and remits one-third amount to Anup. On the due date Suresh fails to remit the amount due to Anup, but he accepts a bill of 17,500 for 3 months, which Anup discounts for 17,100 and remits 2,825 to Suresh. Before the maturity of the renewed bill Suresh becomes insolvent and only 50% was realized from his estate on 31st October, 2020. Pass necessary Journal entries for the above transactions in the books of Suresh. [Nov. 2020, 10 Marks]; [MTP Jan. 2025; Modified Figures-3X]

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Detailed Solution & Explanation

### In the books of Suresh ### Journal Entries | Date | Particulars | L.F. | Debit (₹) | Credit (₹) | | :--- | :--- | :---: | ---: | ---: | | **2020**
15 April | Bills receivable A/c
    To Anup's A/c
(Being accommodation bill drawn on Anup of 15,000) | | 15,000 |
15,000 | | 18 April | Bank A/c
Discounting Charges A/c
    To Bills Receivable A/c
(Being bill discounted with bank) | | 14,700
300 |

15,000 | | | Anup's A/c
    To Bank A/c
    To Discounting Charges A/c
(Being 1/3rd amount remitted to him) | | 5,000 |
4,900
100 | | 18 July | Anup's A/c
    To Bills payable A/c
(Being bill accepted in favour of Anup for 3 Months) | | 17,500 |
17,500 | | | Bank A/c
Discounting Charges A/c (1)
    To Anup’s A/c
(Being amount received with discount charges from Anup) | | 2,825
300 |

3,125 | | 21 Oct | Bills payable A/c
    To Anup's A/c
(Being bills payable accepted earlier, now dishonoured) | | 17,500 |
17,500 | | 31 Oct | Anup's A/c (WN 2)
    To Bank A/c
    To Deficiency A/c
(Being amount paid as full and final settlement) | | 13,125 |
6,562.50
6,562.50 |
### Working Note: 1. Share of Suresh in discounting charges of Second Bill: 400×1000+282517,100=300400 \times \frac{1000 + 2825}{17,100} = 300 2. ### Anup's A/c | Date | Particulars | Amt | Date | Particulars | Amt | | :--- | :--- | ---: | :--- | :--- | ---: | | **2020**
18 Apr

18 July
31 Oct | To Bank A/c
To Discounting Charges
To Bills Payable A/c
To Bank A/c
To Deficiency A/c | 4,900
100
17,500
6,562.50
6,562.50 | **2020**
15 Apr
18 July

21 Oct | By Bills Receivable A/c
By Bank A/c
By Discounting charges
By Bills Payable A/c | 15,000
2,825
300
17,000 | | | **TOTAL** | **35,625** | | **TOTAL** | **35,625** |

About This Chapter: Special Transactions

Paper

Paper 1: Accounting

Weightage

15-20%

Key Topics

Bills of Exchange, Consignment, Average Due Date

This chapter covers Bills of Exchange, Consignment, Average Due Date and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Promissory Note

An instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money.

Related Comparison Tables

Promissory Note vs Bill of Exchange: Negotiable Instruments

More Questions from Bills of Exchange and Promissory Notes

A firm purchased a second-hand machinery on April 1, 2021 for 15,00,000 subsequent to which ₹ 2,00,000 were spent on its repairs and installation. On October 1, 2021 another machinery was purchased for 9,00,000 and cost of installing the machine in a new plant is ₹ 20,000. The firm also shifted the machinery purchased on April 1, 2021 to the new plant and incurred freight of 10,000. They adopted a policy of charging depreciation @ 12% per annum on diminishing balance method. On April 1, 2023 it was decided to change the method and rate of depreciation to straight line basis. On this date, the remaining useful life was assessed as 5 years for both the machines purchased with no scrap value. On October 1, 2023 the first machine become outdated and sold for 2,50,000. On the same date, another machinery was purchased for * 8,50,000. The estimated useful life of the machine is 10 years and residual value is ₹ 30,000. You are required to prepare the machinery account for the year ending March 31, 2024. [Jan. 2025, 10 Marks]

Bill of exchange and the various parties to it. [MTP Jan. 2025]

Meaning of Promissory Note

Retirement of bill [RTP Jan. 2025]; [MTP Jan. 2025]

Bill of Exchange and Promissory Note

A promissory note can be made payable to the bearer. [Sep. 2024, 2 Marks]

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