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On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?
- a)120
- b)100
- c)140
- d)160
Correct answer is option 'B'. Can you explain this answer?
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On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment...
Calculation of Discount for Premature Payment of Bill of Exchange
Given:
- Amount of the bill of exchange = Rs 10,000
- Due date of the bill of exchange = 1.4.06 (3 months after the date of the bill)
- Date of premature payment = 4.3.06 (28 days before the due date)
- Rate of discount = 12% p.a.
To calculate the discount for premature payment, we need to find out the present value of the bill of exchange on the date of premature payment.
Calculation of Present Value of Bill of Exchange
The present value of the bill of exchange can be calculated using the following formula:
Present Value = Amount of the bill of exchange x Discount Factor
Where,
Discount Factor = 1 / (1 + Rate of Discount x Time)
Time = Number of Days from the Date of Premature Payment to the Due Date of the Bill of Exchange / 365
Substituting the given values in the formula, we get:
Time = 28 / 365 = 0.0767
Discount Factor = 1 / (1 + 0.12 x 0.0767) = 0.9923
Present Value = 10,000 x 0.9923 = Rs 9,923
Calculation of Discount for Premature Payment
The discount for premature payment can be calculated as the difference between the amount of the bill of exchange and its present value on the date of premature payment.
Discount = Amount of the bill of exchange - Present Value
Discount = 10,000 - 9,923
Discount = Rs 77
Therefore, the correct discount for premature payment in the books of Ekta is Rs 77, which is option 'B'.
Given:
- Amount of the bill of exchange = Rs 10,000
- Due date of the bill of exchange = 1.4.06 (3 months after the date of the bill)
- Date of premature payment = 4.3.06 (28 days before the due date)
- Rate of discount = 12% p.a.
To calculate the discount for premature payment, we need to find out the present value of the bill of exchange on the date of premature payment.
Calculation of Present Value of Bill of Exchange
The present value of the bill of exchange can be calculated using the following formula:
Present Value = Amount of the bill of exchange x Discount Factor
Where,
Discount Factor = 1 / (1 + Rate of Discount x Time)
Time = Number of Days from the Date of Premature Payment to the Due Date of the Bill of Exchange / 365
Substituting the given values in the formula, we get:
Time = 28 / 365 = 0.0767
Discount Factor = 1 / (1 + 0.12 x 0.0767) = 0.9923
Present Value = 10,000 x 0.9923 = Rs 9,923
Calculation of Discount for Premature Payment
The discount for premature payment can be calculated as the difference between the amount of the bill of exchange and its present value on the date of premature payment.
Discount = Amount of the bill of exchange - Present Value
Discount = 10,000 - 9,923
Discount = Rs 77
Therefore, the correct discount for premature payment in the books of Ekta is Rs 77, which is option 'B'.
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On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. Can you explain this answer?
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On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. 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 On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. 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 On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. Can you explain this answer?.
On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. 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 On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. 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 On 1.1.06 Vikas draws a bill of exchange for Rs 10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.06, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?a)120b)100c)140d)160Correct answer is option 'B'. Can you explain this answer?.
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