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CMA Foundation · Fundamentals of Financial and Cost Accounting · Bills of Exchange

Anil accepted a bill of Rs 40,000 drawn by Bimal. Before maturity Anil requested renewal; Bimal cancelled the old bill, Anil paid Rs 10,000 in cash and accepted a new bill for the balance plus interest of Rs 900. What is the amount of the new bill?

The new bill is Rs 30,900. The old bill of Rs 40,000 is reduced by the Rs 10,000 cash paid, leaving Rs 30,000, and the interest of Rs 900 for the extended period is added to arrive at the amount of the renewed bill.

  1. ARs 30,000
  2. BRs 40,900
  3. CRs 30,900Correct
  4. DRs 29,100

Explanation

Balance after cash payment = 40,000 - 10,000 = 30,000. Interest of 900 is added to the new bill, giving 30,900. Rs 30,000 omits interest; Rs 29,100 wrongly subtracts it.

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