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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 for thebalance.Slow endorses the billto his creditor Slim in full settlement of his?
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Short owes Slow Rs. 6,000 for which the former accepts a three months ...
Calculation of Interest

Short owes Slow Rs. 6,000 for which Slow accepts a three-month bill. The bill is discounted immediately with Strong Bank at 12% p.a. The calculation of interest is as follows:
- Discounting charges = Rs. 6,000 x 12/100 x 3/12 = Rs. 180
- Amount received by Slow = Rs. 5,820

Dishonour of Bill

On the due date, the bill is dishonoured, and Strong Bank pays Rs. 20 as noting charge. Therefore, the total amount paid by the bank is Rs. 5,800 (Rs. 5,820 - Rs. 20).

Payment by Short

Short pays Rs. 1,180, including interest of Rs. 200, on the due date. Therefore, the amount still due is Rs. 4,620.

Issuance of New Bill

Short gives another bill for Rs. 4,620 at three months.

Settlement with Slim

Slow endorses the new bill to his creditor Slim in full settlement of his debt. This means that Slow transfers all his rights to Slim, and Slim becomes the new holder of the bill. Slim can now present the bill for payment on the due date and collect the amount due.
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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 for thebalance.Slow endorses the billto his creditor Slim in full settlement of his?
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