CMA Foundation · Fundamentals of Financial and Cost Accounting · Bills of Exchange
Anil endorsed to Bimal a Rs 30,000 bill accepted by Chetan. Chetan became insolvent, and the bill was dishonoured on the due date. Bimal paid noting charges of Rs 500 and Anil reimbursed all. Anil's entry for dishonour will debit Chetan's account with:
Chetan's account is debited Rs 30,500. Anil pays Bimal the bill amount of Rs 30,000 plus Rs 500 noting charges, and the whole amount is recoverable from the acceptor, so it is charged to the acceptor's account.
- ARs 30,000
- BRs 29,500
- CRs 30,500Correct
- DRs 500
Explanation
On dishonour, the endorsee recovers the bill amount plus noting charges from the endorser, who in turn charges these to the acceptor. So Chetan is debited Rs 30,000 + Rs 500 = Rs 30,500. Rs 30,000 omits the charges.
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