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On 1st January 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4th February 2006 @ 15% p.a. The discounting charges will be:
- a)Rs.3,000
- b)Rs. 750
- c)Rs. 500
- d)None
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
On 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew...
Calculation of Discounting Charges:
- The bill is drawn for 3 months, which means it will mature on 1st April 2006.
- The bank has discounted the bill on 4th February 2006, which means there are still 2 months left for maturity.
- The bank charges interest on the amount of the bill for the remaining period of 2 months at the rate of 15% p.a.
Using the formula,
Discount = Amount of the bill × Rate of interest × Time period
100
- Amount of the bill = Rs. 20,000
- Rate of interest = 15% p.a.
- Time period = 2/12 years (2 months out of 12 months)
Discount = 20,000 × 15 × 2/12
100
= Rs. 500
Therefore, the discounting charges will be Rs. 500.
Explanation:
When Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months, he got an assurance of payment from Renu after 3 months. But Vimal did not want to wait for 3 months to receive the payment. Hence, he discounted the bill with the bank on 4th February 2006 @ 15% p.a.
Discounting a bill means selling it to the bank before maturity at a discount. The bank pays the amount of the bill to the seller (Vimal) after deducting a certain percentage of the bill amount as discounting charges (interest). In this case, the bank has deducted Rs. 500 as discounting charges and paid Rs. 19,500 to Vimal on 4th February 2006 itself.
Thus, Vimal has received his payment before the due date by discounting the bill with the bank. The bank has earned a profit of Rs. 500 as discounting charges for providing this service to Vimal.
- The bill is drawn for 3 months, which means it will mature on 1st April 2006.
- The bank has discounted the bill on 4th February 2006, which means there are still 2 months left for maturity.
- The bank charges interest on the amount of the bill for the remaining period of 2 months at the rate of 15% p.a.
Using the formula,
Discount = Amount of the bill × Rate of interest × Time period
100
- Amount of the bill = Rs. 20,000
- Rate of interest = 15% p.a.
- Time period = 2/12 years (2 months out of 12 months)
Discount = 20,000 × 15 × 2/12
100
= Rs. 500
Therefore, the discounting charges will be Rs. 500.
Explanation:
When Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months, he got an assurance of payment from Renu after 3 months. But Vimal did not want to wait for 3 months to receive the payment. Hence, he discounted the bill with the bank on 4th February 2006 @ 15% p.a.
Discounting a bill means selling it to the bank before maturity at a discount. The bank pays the amount of the bill to the seller (Vimal) after deducting a certain percentage of the bill amount as discounting charges (interest). In this case, the bank has deducted Rs. 500 as discounting charges and paid Rs. 19,500 to Vimal on 4th February 2006 itself.
Thus, Vimal has received his payment before the due date by discounting the bill with the bank. The bank has earned a profit of Rs. 500 as discounting charges for providing this service to Vimal.
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On 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew...
Answer C beacuse he discounted after 1 month. =20000 * 15/100 * 2/12 =500
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On 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. Can you explain this answer?
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On 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. 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 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. 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 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. Can you explain this answer?.
On 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. 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 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. 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 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. Can you explain this answer?.
Solutions for On 1stJanuary 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4thFebruary 2006 @ 15% p.a. The discounting charges will be:a)Rs.3,000b)Rs. 750c)Rs. 500d)NoneCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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