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

Neeraj Ltd. held a bill of Rs 60,000 accepted by Omkar, discounted with the bank for Rs 58,800. The bill was dishonoured at maturity and the bank debited Neeraj's account with Rs 60,000 plus noting charges of Rs 300. Neeraj then agreed with Omkar to renew by a new 3-month bill including interest of Rs 1,500, Omkar paying nothing in cash. What is the amount of the new bill, if the noting charges are also recovered from Omkar?

The new bill is Rs 61,800. Omkar owes the bill amount of Rs 60,000 plus Rs 300 noting charges, and Rs 1,500 interest is added. The earlier discount of Rs 1,200 is Neeraj's own expense and is not recovered from Omkar.

  1. ARs 61,500
  2. BRs 61,800Correct
  3. CRs 60,300
  4. DRs 62,100

Explanation

On dishonour Omkar is debited Rs 60,300 (bill plus noting charges); the discount loss of Rs 1,200 was already booked and is not recovered. Add interest Rs 1,500 to get 61,800. Rs 61,500 forgets noting charges, and Rs 62,100 wrongly adds the discount.

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