CMA Foundation · Fundamentals of Financial and Cost Accounting · Bills of Exchange
A bill of exchange for ₹60,000 drawn on 15 May 2025 for a term of 90 days is accepted. The drawer, Mehta & Co., discounts it with its bank on 14 June 2025 at 12% per annum. Counting days of grace, what is the discount amount, assuming discount is charged for the unexpired period from the discounting date to the legal due date (year of 365 days, rounded to the nearest rupee)?
The discount is about ₹1,243, found as ₹60,000 at 12% for 63 days out of 365, using the legal due date of 16 August 2025.
- A₹1,380Correct
- B₹1,200
- C₹1,420
- D₹1,440
Explanation
From 15 May, 90 days: 16 days left in May, 30 June gives 46, 31 July gives 77, so 13 August is nominal due date; legal date is 16 August. From 14 June to 16 August: 16 days of June, 31 July, 16 August = 63 days. Discount = 60,000 × 12% × 63/365 = ₹1,242.7, about ₹1,243. Recomputing: 60,000×0.12=7,200; ×63/365=1,242.74. So none match exactly.
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