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CA Foundation Exam  >  CA Foundation Questions  >  A draws a bill for Rs. 20,000 on ‘BR... Start Learning for Free
A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Accepts for 2 months. After 1 month ‘B’ paid the bill amount @9%. Journal entry in the Books of ‘B’ will be
  • a)
    Bank A/c  Dr.20,000
    To Bills payable A/c 20,000
  • b)
    Bank A/c  Dr.20,000
    To Bills payable A/c 19,850
    To Discount A/c 150
  • c)
    Bills payable A/c Dr. 20,000
    To Bank A/c 20,000
  • d)
    Bills payable A/c Dr.20,000
    To Discount A/c 150
    To Bank A/c 19,850
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Acce...
Journal entry in the Books of B for payment of a bill of Rs. 20,000 drawn by A and accepted by B for 2 months, when B paid the bill amount @9% after 1 month will be:

Answer: d) Bills payable A/c Dr. 20,000
To Discount A/c 150
To Bank A/c 19,850

Explanation:
The above journal entry can be explained with the help of the following points:

• When A draws a bill of Rs. 20,000 on B, it becomes a liability for B and is recorded in the books under the head 'Bills Payable'.

• When B accepts the bill for 2 months, it becomes a financial instrument for A and is recorded in the books under the head 'Bills Receivable'.

• After 1 month, when B pays the bill amount @9%, B gets a discount of 1% (i.e., 9%-8%) on the bill amount. This discount is a gain for B and is recorded in the books under the head 'Discount'.

• The entry for payment of the bill amount @9% will be as follows:
- Bills payable A/c Dr. 20,000 (Being the payment made on the bill due date)
- To Discount A/c 150 (Being the discount received on the bill amount @9%)
- To Bank A/c 19,850 (Being the actual amount paid to A after deducting the discount)

Hence, option 'D' is the correct answer.
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Community Answer
A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Acce...
This is the case of retirement of bill before due date ... entry will be bills payable acc dr to bank acc to discount received acc

Amount of discount = 20000 x 9/100 x 1/12= 150
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8. GOURU and GAYAANI were friends and in need of funds. On 1st April,2015 Gouru drew a bill for Rs. 2,00,000 for three months on ?Gyani. On 4.4.15 Gouru got the bill discounted at 15% per annum and remitted half of the proceeds to Gyani. On the due date, Gyani could not meet the bill, instead, Gouru accepted Gyani’s bill for Rs.1,20,000 on 4th July,2015 for two months. This was discounted by Gyani at 15% per annum and out this Rs. 19,500 was paid to Gouru after deducting Rs.500 discounting charges. Due to financial crises, Gouru became insolvent and the bill drawn on him was dishonoured and his estate paid 40% Days of grace for discount purposes maybe ignored. (i). Give journal entries and (ii). Prepare Gyani’s Account-in the books of Gouru Related: ICAI Notes 7.1 - Bills of Exchange & Promissory Notes (Part - 4)?

Ram ratan sold goods to ahmed for ₹100000 on 30th june 2017 for which latter accepts 4 bills of ₹25000 each drawn on him payable after 2,4,6,8 months respectively. Ram ratan retained the first bill .The second bill was sent by him for collection. The third bill was endorsed by him to C in Part payment of ₹40000 owed to him .The fourth bill was discounted by him with his bankers at discount of 15%p.a. The first bill was met on due date .The first bill was met on due date .As regards second bill ,Ahmed met Ram Ratan two days before maturity date of bill and paid him ₹10000 and accepted a fresh bill for 30 days for balance with interest 18% p.a.This bill as well as the third bill were met by drawer.ahmed was declared insolvent on 31 st December 2017 and on fourth bill becoming due, bank debited Ram ratan with amount of bill and changes of ₹2500 .It is ascertained by Ram ratan that estate of ahmed will not be in a position to meet liabilities to extent of of more than 40%?

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A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Accepts for 2 months. After 1 month ‘B’ paid the bill amount @9%. Journal entry in the Books of ‘B’ will bea)Bank A/c Dr.20,000To Bills payable A/c 20,000b)Bank A/c Dr.20,000To Bills payable A/c 19,850To Discount A/c 150c)Bills payable A/c Dr. 20,000To Bank A/c 20,000d)Bills payable A/c Dr.20,000To Discount A/c 150To Bank A/c 19,850Correct answer is option 'D'. Can you explain this answer?
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A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Accepts for 2 months. After 1 month ‘B’ paid the bill amount @9%. Journal entry in the Books of ‘B’ will bea)Bank A/c Dr.20,000To Bills payable A/c 20,000b)Bank A/c Dr.20,000To Bills payable A/c 19,850To Discount A/c 150c)Bills payable A/c Dr. 20,000To Bank A/c 20,000d)Bills payable A/c Dr.20,000To Discount A/c 150To Bank A/c 19,850Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Accepts for 2 months. After 1 month ‘B’ paid the bill amount @9%. Journal entry in the Books of ‘B’ will bea)Bank A/c Dr.20,000To Bills payable A/c 20,000b)Bank A/c Dr.20,000To Bills payable A/c 19,850To Discount A/c 150c)Bills payable A/c Dr. 20,000To Bank A/c 20,000d)Bills payable A/c Dr.20,000To Discount A/c 150To Bank A/c 19,850Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A draws a bill for Rs. 20,000 on ‘B’. ‘B’ Accepts for 2 months. After 1 month ‘B’ paid the bill amount @9%. Journal entry in the Books of ‘B’ will bea)Bank A/c Dr.20,000To Bills payable A/c 20,000b)Bank A/c Dr.20,000To Bills payable A/c 19,850To Discount A/c 150c)Bills payable A/c Dr. 20,000To Bank A/c 20,000d)Bills payable A/c Dr.20,000To Discount A/c 150To Bank A/c 19,850Correct answer is option 'D'. Can you explain this answer?.
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