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Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.?
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Short owes Slow Rs. 6,000 for which the former accepts a three months ...
Answer:
Introduction:
This question involves the concept of bills of exchange, discounting of bills of exchange and noting charges.
Given Information:
Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. Short pays Rs. 1,180 including interest of Rs. 200 and gives another bill at three months Short in the book of Slow.
Solution:
Step 1: Calculation of Discounted Value of Bill:
Discounted Value of Bill = Face Value of Bill - Discount
Discount = Face Value of Bill * Rate of Discount * Time
Rate of Discount = 12% p.a.
Time = 3 months = 1/4 year
Discount = 6000 * 12/100 * 1/4 = Rs. 180
Discounted Value of Bill = 6000 - 180 = Rs. 5,820
Step 2: Dishonour of Bill:
On the due date, the bill is dishonoured. This means that Short did not pay the bill amount to Slow. As a result, Strong Bank pays Rs. 20 as noting charge. Noting charge is the fee paid by the bank to the notary public for recording the dishonour of the bill.
Step 3: Calculation of Amount Paid by Short:
Short pays Rs. 1,180 including interest of Rs. 200. This means that Short paid Rs. 980 (1180 - 200) towards the principal amount of the bill.
Step 4: Calculation of New Bill Amount:
Short gives another bill at three months Short in the book of Slow. This means that Short issues a new bill of exchange for Rs. 980, payable after three months.
Conclusion:
In this question, we have seen the concept of bills of exchange, discounting of bills of exchange and noting charges. We have also calculated the discounted value of the bill, the amount paid by Short and the new bill amount.
Introduction:
This question involves the concept of bills of exchange, discounting of bills of exchange and noting charges.
Given Information:
Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. Short pays Rs. 1,180 including interest of Rs. 200 and gives another bill at three months Short in the book of Slow.
Solution:
Step 1: Calculation of Discounted Value of Bill:
Discounted Value of Bill = Face Value of Bill - Discount
Discount = Face Value of Bill * Rate of Discount * Time
Rate of Discount = 12% p.a.
Time = 3 months = 1/4 year
Discount = 6000 * 12/100 * 1/4 = Rs. 180
Discounted Value of Bill = 6000 - 180 = Rs. 5,820
Step 2: Dishonour of Bill:
On the due date, the bill is dishonoured. This means that Short did not pay the bill amount to Slow. As a result, Strong Bank pays Rs. 20 as noting charge. Noting charge is the fee paid by the bank to the notary public for recording the dishonour of the bill.
Step 3: Calculation of Amount Paid by Short:
Short pays Rs. 1,180 including interest of Rs. 200. This means that Short paid Rs. 980 (1180 - 200) towards the principal amount of the bill.
Step 4: Calculation of New Bill Amount:
Short gives another bill at three months Short in the book of Slow. This means that Short issues a new bill of exchange for Rs. 980, payable after three months.
Conclusion:
In this question, we have seen the concept of bills of exchange, discounting of bills of exchange and noting charges. We have also calculated the discounted value of the bill, the amount paid by Short and the new bill amount.
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Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.?
Question Description
Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.?.
Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.?.
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Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.?, a detailed solution for Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.? has been provided alongside types of Short owes Slow Rs. 6,000 for which the former accepts a three months bill drawn by the latter. Slow immediately discounts the bill with his banker Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays Rs. 20 as noting charge. ShortpaysRs. 1,180includinginterestofRs. 200andgivesanotherbillatthreemonths Shortin the book of Slow.? theory, EduRev gives you an
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