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CA Foundation · Accounting · Bills of Exchange and Promissory Notes

Mehta and Nair drew and accepted an accommodation bill of ₹60,000 for their joint benefit, to be shared equally. Mehta drew it on Nair and discounted it for ₹58,200. Mehta sent Nair his share of the proceeds. How much should Mehta send to Nair?

Mehta should send ₹29,100 to Nair. The bill was discounted for ₹58,200 net, and the parties share the benefit equally, so each gets half of the actual cash proceeds. Dividing the face value of ₹60,000 would ignore the discount and overstate Nair's share.

  1. A₹30,000
  2. B₹29,100Correct
  3. C₹28,200
  4. D₹58,200

Explanation

The proceeds of ₹58,200 are net of discount and are shared equally between the two parties, so each is entitled to 58,200 ÷ 2 = ₹29,100. Option A ignores the discount. The discount of ₹1,800 is thus borne equally at ₹900 each.

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