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A bill of 12,000 was discounted by A with the banker for 11,880. At maturity, the bill returned dishonoured, noting charges Rs 20. How much amount will the bank deduct from A’s bank balance at the time of such dishonour?
- a)12,000
- b)11,880
- c)12,020
- d)11,900
Correct answer is option 'C'. Can you explain this answer?
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A bill of 12,000 was discounted by A with the banker for 11,880. At ma...
Discounting a Bill of Exchange
Given information:
- Bill amount = Rs 12,000
- Bill discounted by A with the banker for Rs 11,880
- Bill returned dishonoured with noting charges of Rs 20
To understand how much amount will the bank deduct from A's bank balance at the time of dishonour, we need to understand the concept of discounting a bill of exchange.
Discounting a bill of exchange means that the holder of the bill (in this case, A) can get the money from the banker before the maturity date of the bill. The banker deducts a certain amount (discount) from the bill amount and pays the remaining amount to the holder. At maturity, the banker collects the full amount from the debtor (in this case, the person who owes Rs 12,000 to A) and returns the money to the holder (A).
Calculation:
- Bill amount = Rs 12,000
- Discount = Rs 120 (11,880 - 12,000)
- Amount paid to A = Rs 11,880
- Noting charges = Rs 20
- Total amount deducted by the bank from A's account = Discount + Noting charges = Rs 140
- Amount remaining in A's account = Amount paid to A - Total amount deducted = 11,880 - 140 = Rs 12,020
Therefore, option C (12,020) is the correct answer.
Given information:
- Bill amount = Rs 12,000
- Bill discounted by A with the banker for Rs 11,880
- Bill returned dishonoured with noting charges of Rs 20
To understand how much amount will the bank deduct from A's bank balance at the time of dishonour, we need to understand the concept of discounting a bill of exchange.
Discounting a bill of exchange means that the holder of the bill (in this case, A) can get the money from the banker before the maturity date of the bill. The banker deducts a certain amount (discount) from the bill amount and pays the remaining amount to the holder. At maturity, the banker collects the full amount from the debtor (in this case, the person who owes Rs 12,000 to A) and returns the money to the holder (A).
Calculation:
- Bill amount = Rs 12,000
- Discount = Rs 120 (11,880 - 12,000)
- Amount paid to A = Rs 11,880
- Noting charges = Rs 20
- Total amount deducted by the bank from A's account = Discount + Noting charges = Rs 140
- Amount remaining in A's account = Amount paid to A - Total amount deducted = 11,880 - 140 = Rs 12,020
Therefore, option C (12,020) is the correct answer.
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A bill of 12,000 was discounted by A with the banker for 11,880. At maturity, the bill returned dishonoured, noting charges Rs 20. How much amount will the bank deduct from As bank balance at the time of such dishonour?a)12,000b)11,880c)12,020d)11,900Correct answer is option 'C'. Can you explain this answer?
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