CA Foundation · Accounting · Bills of Exchange and Promissory Notes
Kapoor Brothers hold a bill of ₹30,000 accepted by Nair & Sons. Nair & Sons requests renewal and pays ₹10,000 in cash immediately, plus interest of ₹600 on the balance for the extended period. A new bill is accepted for the remaining amount including interest. What is the amount of the new bill?
The new bill is ₹20,600. The old bill of ₹30,000 is reduced by the ₹10,000 cash paid, leaving ₹20,000, and the ₹600 interest for the extended period is added to this balance. Thus the renewed bill covers principal outstanding plus interest.
- A₹20,000
- B₹20,600Correct
- C₹30,600
- D₹21,200
Explanation
Balance of the old bill = 30,000 − 10,000 = ₹20,000. Add interest of ₹600 on that balance, giving ₹20,600. Option ₹20,000 omits interest, while ₹30,600 ignores the cash payment.
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