CA Foundation · Accounting · Bills of Exchange and Promissory Notes
Kavita Traders holds a 3-month bill of ₹80,000 accepted by Lalit. Lalit retires the bill 1 month before the due date, and Kavita allows a rebate at 12% per annum. What amount does Kavita receive?
Kavita receives ₹79,200. The rebate for one month early payment is 80,000 × 12% × 1/12 = ₹800, which is deducted from the bill amount of ₹80,000, since the acceptor pays less when retiring a bill before maturity.
- A₹79,200Correct
- B₹80,800
- C₹78,400
- D₹79,000
Explanation
Rebate = 80,000 × 12% × 1/12 = ₹800. Amount received = 80,000 − 800 = ₹79,200. Adding the rebate (₹80,800) is a sign error, and using two months of rebate gives ₹78,400.
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