Class 11 Accountancy NCERT Solutions for Chapter 8 2021: Download PDF

NCERT Solutions for Class 11 Accountancy Chapter 8: When you don’t know how to solve simple accounting difficulties, they appear more difficult. Don’t worry, we’ve got you covered with our NCERT Solutions For Class 11 Accountancy Chapter 8. We bring Class 11 form so that you can simply identify and comprehend the more difficult problems. We’ll look at Bill of Exchange in Accountancy Class 11 Chapter 8 and how it’s managed.

NCERT Solutions For Class 11 Accountancy Chapter-8 PDF

NCERT solutions for Class 11 Accountancy Chapter 8

 

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NCERT Solutions For Class 11 Accountancy Chapter-8: Overview

What is the Bill of Exchange?

In accounting, a bill of exchange is a negotiable instrument. It is a legally enforceable agreement between two parties to pay a specific amount of money on demand. They’re primarily employed in international trade. According to the Negotiable Instruments Act of 1881, a bill of exchange is a written instrument raised by the maker in unconditional order to a specific person or to a specific person or to a specific person or to a specific person or to a specific person or to a specific person or to a specific person or to a bearer of the instrument to pay a fixed amount on demand. The Bill of Exchange is elaborated in NCERT Solutions For Class 11 Accountancy Chapter 8

There are three units involved in the transaction: Drawee, Drawer and Payee

There Are Three Units Involved in the

Drawee- Is the person or entity who makes a payment to the payee.

Drawer-Is the party who demands that the drawee pay the third party the sum.

Payee- Is the party who paid the drawee’s stipulated amount

The title, amount to be paid, date to be paid, payee name and status, identification number, and signature of the drawee are all included in the Bill of Exchange.

Different bills of Exchange 

You will come across numerous sorts of Bills of Exchange in CBSE NCERT Solutions For Class 11 Accountancy Chapter 8.

Documentary Bill: As the name implies, a documentary bill is evidence of what happened between the seller and the customer.

papers proving that the transaction took place

2. Demand Bill: A demand bill is one that is paid when it is requested. It does not have a set expiration date, thus it can be cleared anytime it is needed.

3. Clean Bill: A clean bill is one that contains no documentary evidence that the transaction occurred.

Foreign Bill: A foreign bill is one that is paid outside of India, as the name implies. Import and export bills are examples of foreign bills.

5. Trade Bill: A trade measure is a bill that focuses solely on trade issues.

6. Supply Bill: A supply bill is a bill that is withdrawn from a government department by either a supplier or a contractor.

Access NCERT Solutions For Class 11 Accountancy Chapter 8

 Name any two types of commonly used negotiable instruments.

1. Promissory Notes

2. Cheques

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

3. 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.

4. 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

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. Give the performa of a Bills Receivable Book.

12. Give the performa of a Bills Payable Book.

13. 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.

14. 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.

15. Give the performa of a Bill of Exchange.

The following is a performa of bill of exchange

Long Answers for Class 11 Accountancy Chapter 8 – Bill of Exchange

1. 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.

2. 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):

Entry in the books of drawee:

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):

In the books of drawee:

3. 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.

4. Distinguish between bill of exchange and promissory note.

The points of comparison are as follows:

5. 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.

6. 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.

7. 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.

Numerical Answers for Class 11 Accountancy Chapter 8 – Bill of Exchange

1. 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:

2. 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:

3. 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:

4. 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:

5. 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:

6. 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:

7. 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)

(ii)

(iii)

(iv)

8. Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.

Date Amount

₹

21 Dec, 2016 1,000

26 Dec, 2016 1,200

Dec.18, 2016 2,000

31 Dec, 2016 5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.

The necessary journal entries are as follows:

9. Narayanan purchased goods for ₹ 25,000 from Ravindran on Feb. 01, 2016. Ravindran drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravindran and Narayanan in following cases:

• When the bill was retained by Ravindran with him till the date of its maturity.
• When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.
• When the bill was endorsed to his creditor Ganeshan.
• When the bill was sent by Ravindran to his bank for collection a few days before it maturity.

Necessary journal entries are as follows:

(i) : When the bill was retained by Ravindran with him till the date of its maturity

(ii) : When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.

(iii) : When the bill was endorsed to his creditor Ganeshan

(iv): When the bill was sent by Ravindran to his bank for collection a few days before it maturity

10. Ravi sold goods for ₹ 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for ₹ 5,000 payable after one month. The second bill was for ₹ 10,000 payable after 40 days; the third bill was for ₹ 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of ₹ 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

The necessary journal entries are shown below:

11. On Jan 01, 2016 Neha sold goods for ₹ 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.

The necessary journal entries are shown below:

  

12. On Jan 15, 2016 Raghu sold goods worth ₹ 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for ₹ 5,000 payable after one month, the second bill was for ₹ 20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his creditor Dewan in full settlement of a debt of ₹ 5,200. The second bill was discounted by Raghu @ 6 % p.a. and the third bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid ₹ 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonoured by Devendra and the bank paid ₹ 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest ₹ 1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra’s account in Raghu’s books and Raghu’s account in Devendra’s account.

The journal entries are as follows:

13. Vimal purchased goods ₹ 25,000 from Kamal on Jan 15, 2016 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill. Record the necessary journal entries in the books of Kamal and Vimal when.

•    The bill was retained by Kamal till the date of its maturity.

•    The bill was immediately discounted by Kamal with his bank @ 6% p.a.

•    The bill was endorsed by Kamal in favour of his creditor Sharad.

•    Five days before its maturity the bill was sent by Kamal to his bank for collection.

The necessary journal entries are shown below:

(i) : The bill was retained by Kamal till the date of its maturity

(ii) : The bill was immediately discounted by Kamal with his bank @ 6% p.a.

Case (iii) : The bill was endorsed by Kamal in favour of his creditor Sharad

Case (IV): Five days before its maturity the bill was sent by Kamal to his bank for collection

14. Abdula sold goods to Tahir on Jan 17, 2017 for ₹ 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid ₹ 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of ₹ 18,700 including interest and noting charges. Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.

The necessary journal entries are shown below:

15. Asha sold goods worth ₹ 19,000 to Nisha on March 02, 2017. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.

Record the necessary journal entries in the books of Asha and Nisha.

The necessary journal entries are presented below

16. On Feb. 02, 2017, Verma purchased from Sharma goods for ₹ 17,500. Verma paid ₹ 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.

Gupta for the full settlement of a debt of ₹ 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹ 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹ 15,500 which includes noting charges and interest. Verma settled Sharma’s claim by cheque for the same amount.

Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma’s and Gupta’s accounts in the books of Sharma. Sharma’s account in the books of Verma. And also Sharma’s account in the books of Gupta.

The necessary journal entries are given below:

17. Lilly sold goods to Mathew on 1.3.2017 for ₹ 12,000 and drew upon Mathew a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a non-business day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act.1881. The bill was dishonoured by Mathew and Lilly paid ₹ 45 as noting charges. Mathew settled the claim of Lilly five days after the dishonour of the bill by a cheque, which includes interest @ 12% for the term of the bill. Journalise the above transactions in the books of Lilly and Mathew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.

The transactions are journalized as follows:

18. Kapil purchased goods for ₹ 21,000 from Gaurav on 1.2.2017 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2017 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid ₹ 100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gourav.

The necessary journal entries are shown below:

19. On Feb. 14, 2017 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On 10 Apr, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹ 2,000 in cash and draw a new bill for the balance including interest ₹ 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.

Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.

The necessary journal entries are recorded below:

20. Nikhil sold goods for ₹ 23,000 to Akhil on Dec. 01, 2017. He drew upon Akhil a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil discounted the bill immediately with his bank @12 p.a. On the due date Akhil dishonoured the bill of exchange and the bank paid ₹ 100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest @10% p.a. which he agreed. The new bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept ₹ 10,000 in cash immediately and drew a third bill upon him including interest of ₹ 500. Nikhil agreed to Akhil’s request. The third bill was payable after one month. Akhil met the third bill on its maturity. Record the necessary journal entries in the books of Nikhil and Akhil and also prepare Akhil’s account in the books of Nikhil and Nikhil’s account in the books of Akhil.

The necessary journal entries are recorded as follows:

21. On Jan 01, 2017 Vibha sold goods worth ₹ 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of ₹ 200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.

The necessary journal entries are recorded as follows:

22. Following was the position of debtor and creditor of Gautam as on 1.1.2017.

Debtors Creditors

₹ ₹

Babu 5,000 –

Chanderkala 8,000 –

Kiran 13,500 –

Anita 14,000 –

Anju – 5,000

Sheiba – 12,000

Manju – 6,000

 

The following transactions took place in the month of Jan 2017:

Jan. 02 Drew on Babu at two months after date at full settlement for ₹ 4,800. Babu accepted the bill and returned it on 5.1.2017.

Jan. 04 Babu’s bill discounted for ₹ 4,750.

Jan. 08 Chanderkala sent a promissory note for ₹ 8,000 payable three months after date.

Jan. 10 Promissory note established from Chanderkala discounted for ₹ 7,900

Jan. 12 Accepted Sheiba draft for the amount due payable two months after date.

Jan. 22 Anita sent his promissory note payable after two months.

Jan. 23 Anita’s promissory note endorsed in favour of Manju.

Jan. 25 Accepted Anju’s draft payable after three months.

Jan. 29 Kiran sent ₹ 2,000 in cash and a promissory note for the balance payable after three months.

Record the above transactions in the proper subsidiary books.

The transactions are recorded in the books below:

23. On Jan. 01, 2017 Harsh accepted a month bill for ₹ 10,000 drawn on him by Tanu for latter’s benefit. Tanu discounted the bill on same day @ 8% p.a. On the due date Tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance. Record the journal entries in the Books of Tanu and Harsh.

The journal entries recorded are shown below:

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Concepts covered in this chapter

Access Other Chapters and NCERT Solutions For Class 11 Accountancy Chapter 8

You can download the PDF of NCERT Solutions Class 11 Accountancy for Chapter 8 other chapters:

Chapter-1 Introduction to Accounting

Chapter-2 Theory Base Of Accounting

Chapter-3 Recording Of Transactions – I

Chapter-4 Recording Of Transactions – II

Chapter-5 Bank Reconciliation Statement

Chapter-6 Trial Balance And Rectification Of Errors

Chapter-7 Depreciation, Provisions, and Reserves

Chapter-9 Financial Statements – I

Chapter-10 Financial Statements – II

Chapter-11 Accounts From Incomplete Records

Chapter-12 Applications Of Computers In Accounting

Chapter-13 Computerised Accounting System

Chapter-14 Depreciation

Chapter-15 Bank Reconciliation Statement

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FAQ (Frequently Asked Questions):NCERT Solutions for Class 11 Accountancy Ch-8