Bill of Exchange — NCERT Class 11 Accountancy Solutions
How to Use These Solutions
1. Write every journal entry yourself first — date, particulars, ledger folio, debit amount, credit amount. 2. Compare your entries with the solutions below. Focus on the account names, amounts, and narration. 3. For numericals on maturity date calculation, always remember to add 3 days of grace. 4. Re-attempt incorrect questions the next day without looking at the solution.
Key Concepts Recap
Maturity Date Calculation:
- Add the term of the bill to the date of drawing
- Add 3 days of grace
- If maturity falls on a public holiday, due date = preceding business day
- If maturity falls on a sudden holiday, due date = next business day
Journal Entry Format:
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| ...Dr. | xxx | |||
| To ... | xxx | |||
| (Being narration) |
Key Rules:
- Bills Receivable = Asset for the drawer (seller)
- Bills Payable = Liability for the drawee (buyer)
- Discounting = Bank pays cash before maturity, charges discount
- Endorsement = Transfer bill to settle own debt
- Dishonour = Drawee fails to pay; amount recoverable from drawee
- Renewal = Old bill cancelled, new bill with interest for extended period
- Retirement = Early payment; drawer allows rebate
Intext Questions
Question 1 (Page 264)
Q: Define a bill of exchange.
Question 2 (Page 267)
Q: Distinguish between a bill of exchange and a promissory note.
| Basis | Bill of Exchange | Promissory Note |
|---|---|---|
| Nature | Order to pay | Promise to pay |
| Parties | Three (Drawer, Drawee, Payee) | Two (Maker, Payee) |
| Acceptance | Required from drawee | Not required |
| Maker | Creditor | Debtor |
| Liability | Joint (drawer + acceptor) | Sole (maker) |
| Payable to bearer | Not allowed | Allowed |
Chapter-End Exercise Solutions
Exercise 1
Q: On 1st January 2025, Ram sold goods worth Rs 20,000 to Shyam. On the same date, Ram drew a bill of exchange for Rs 20,000 payable after 3 months on Shyam, which was duly accepted by Shyam. Pass journal entries in the books of Ram and Shyam in the following cases:
(a) Ram retained the bill till maturity and the bill was honoured on the due date. (b) Ram discounted the bill with his bank at 12% p.a. (c) Ram endorsed the bill in favour of his creditor, Mohan. (d) Ram sent the bill to his bank for collection.
(a) Bill retained till maturity and honoured
In the Books of Ram (Drawer)
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Jan 1 | Shyam A/c Dr. | 20,000 | ||
| To Sales A/c | 20,000 | |||
| (Being goods sold on credit to Shyam) | ||||
| Jan 1 | Bills Receivable A/c Dr. | 20,000 | ||
| To Shyam A/c | 20,000 | |||
| (Being bill drawn and accepted) | ||||
| Apr 4 | Cash/Bank A/c Dr. | 20,000 | ||
| To Bills Receivable A/c | 20,000 | |||
| (Being bill honoured on maturity) |
In the Books of Shyam (Drawee)
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Jan 1 | Purchases A/c Dr. | 20,000 | ||
| To Ram A/c | 20,000 | |||
| (Being goods purchased on credit from Ram) | ||||
| Jan 1 | Ram A/c Dr. | 20,000 | ||
| To Bills Payable A/c | 20,000 | |||
| (Being bill accepted and returned) | ||||
| Apr 4 | Bills Payable A/c Dr. | 20,000 | ||
| To Cash/Bank A/c | 20,000 | |||
| (Being bill paid on maturity) |
(b) Bill discounted with bank at 12% p.a.
Discount = 20,000 x 12/100 x 3/12 = Rs 600 Net amount received = 20,000 - 600 = Rs 19,400
In the Books of Ram
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Jan 1 | Bank A/c Dr. | 19,400 | ||
| Discount A/c Dr. | 600 | |||
| To Bills Receivable A/c | 20,000 | |||
| (Being bill discounted at 12% p.a.) |
Shyam's entries on maturity remain the same as in (a).
(c) Bill endorsed to Mohan
In the Books of Ram
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Jan 1 | Mohan A/c Dr. | 20,000 | ||
| To Bills Receivable A/c | 20,000 | |||
| (Being bill endorsed in favour of Mohan) |
(d) Bill sent to bank for collection
In the Books of Ram
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Jan 1 | Bills Sent for Collection A/c Dr. | 20,000 | ||
| To Bills Receivable A/c | 20,000 | |||
| (Being bill sent to bank for collection) | ||||
| Apr 4 | Bank A/c Dr. | 20,000 | ||
| To Bills Sent for Collection A/c | 20,000 | |||
| (Being bill collected by bank on maturity) |
Exercise 2
Q: On 1st February 2025, A sold goods to B for Rs 30,000. A drew a bill on B for Rs 30,000 payable after 2 months. B accepted the bill. On the due date, B dishonoured the bill and noting charges of Rs 200 were paid. Pass journal entries in the books of A and B.
Maturity Date Calculation: Date of drawing: 1st February 2025 Term: 2 months Nominal due date: 1st April 2025 Add 3 days of grace: 4th April 2025 (Maturity Date)
In the Books of A (Drawer)
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Feb 1 | B A/c Dr. | 30,000 | ||
| To Sales A/c | 30,000 | |||
| (Being goods sold on credit to B) | ||||
| Feb 1 | Bills Receivable A/c Dr. | 30,000 | ||
| To B A/c | 30,000 | |||
| (Being bill drawn and accepted) | ||||
| Apr 4 | B A/c Dr. | 30,000 | ||
| To Bills Receivable A/c | 30,000 | |||
| (Being bill dishonoured on maturity) | ||||
| Apr 4 | B A/c Dr. | 200 | ||
| To Cash/Bank A/c | 200 | |||
| (Being noting charges paid on dishonour) |
In the Books of B (Drawee)
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Feb 1 | Purchases A/c Dr. | 30,000 | ||
| To A A/c | 30,000 | |||
| (Being goods purchased on credit from A) | ||||
| Feb 1 | A A/c Dr. | 30,000 | ||
| To Bills Payable A/c | 30,000 | |||
| (Being bill accepted) | ||||
| Apr 4 | Bills Payable A/c Dr. | 30,000 | ||
| To A A/c | 30,000 | |||
| (Being bill dishonoured) | ||||
| Apr 4 | Noting Charges A/c Dr. | 200 | ||
| To A A/c | 200 | |||
| (Being noting charges on dishonour) |
Exercise 3
Q: On 1st March 2025, X drew a bill on Y for Rs 50,000 payable after 3 months. Y accepted the bill. On the due date, Y requested X to renew the bill for 2 months with interest at 15% p.a. X agreed. Pass journal entries in the books of both parties.
Maturity Date of Original Bill: Date of drawing: 1st March 2025 Term: 3 months Nominal due date: 1st June 2025 Add 3 days of grace: 4th June 2025
Interest on Renewal: Interest = 50,000 x 15/100 x 2/12 = Rs 1,250
In the Books of X (Drawer)
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Mar 1 | Y A/c Dr. | 50,000 | ||
| To Bills Receivable A/c | 50,000 | |||
| (Being original bill dishonoured on renewal) | ||||
| Jun 4 | Y A/c Dr. | 1,250 | ||
| To Interest A/c | 1,250 | |||
| (Being interest charged for extended period) | ||||
| Jun 4 | Bills Receivable A/c Dr. | 51,250 | ||
| To Y A/c | 51,250 | |||
| (Being new bill accepted for Rs 51,250 including interest) |
In the Books of Y (Drawee)
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| 2025 Jun 4 | Bills Payable A/c Dr. | 50,000 | ||
| To X A/c | 50,000 | |||
| (Being original bill cancelled on renewal) | ||||
| Jun 4 | Interest A/c Dr. | 1,250 | ||
| To X A/c | 1,250 | |||
| (Being interest charged for extended period) | ||||
| Jun 4 | X A/c Dr. | 51,250 | ||
| To Bills Payable A/c | 51,250 | |||
| (Being new bill accepted for Rs 51,250) |
Exercise 4
Q: Calculate the maturity date of the following bills: (a) Bill dated 1st January 2025 payable after 3 months (b) Bill dated 15th February 2025 payable after 60 days (c) Bill dated 10th March 2025 payable after 2 months
(a) Bill dated 1st January 2025, payable after 3 months:
- Nominal due date: 1st April 2025
- Add 3 days of grace: 4th April 2025
- Maturity Date: 4th April 2025
(b) Bill dated 15th February 2025, payable after 60 days:
- February (remaining): 28 - 15 = 13 days (2025 is not a leap year)
- March: 31 days (total so far: 44 days)
- April: 60 - 44 = 16 days
- Nominal due date: 16th April 2025
- Add 3 days of grace: 19th April 2025
- Maturity Date: 19th April 2025
(c) Bill dated 10th March 2025, payable after 2 months:
- Nominal due date: 10th May 2025
- Add 3 days of grace: 13th May 2025
- Maturity Date: 13th May 2025
Practice Tips
1. For every journal entry, write the narration — examiners check this. 2. Always calculate the maturity date first before passing entries. 3. When a bill is discounted and dishonoured, remember the entry is Drawee Dr. / To Bank (not To Bills Receivable). 4. In renewal, interest is always added to the new bill amount unless the question says it is paid in cash. 5. Noting charges go to the Drawee account (debited) and Cash/Bank (credited) in the drawer's books.
Related Pages
- [Chapter 8 Guide — Bill of Exchange](/school/cbse/class/11/accountancy/cbse-bill-of-exchange)
- [All Class 11 Accountancy Solutions](/school/cbse/class/11/accountancy/solutions)
- [Class 11 Accountancy Subject Guide](/school/cbse/class/11/accountancy)