CA Foundation · Accounting · Bills of Exchange and Promissory Notes
Pooja Enterprises discounted a ₹1,20,000 bill of Rathi & Sons with its bank at 12% p.a. for the remaining 2 months to maturity. What amount did the bank credit to Pooja Enterprises?
The bank credits ₹1,17,600. Discount is charged on the face value of ₹1,20,000 at 12% for two months, which is ₹2,400, and this is deducted from the face value to get the net proceeds.
- A₹1,17,600Correct
- B₹1,20,000
- C₹1,18,800
- D₹1,22,400
Explanation
Discount = 1,20,000 × 12% × 2/12 = ₹2,400. Net proceeds = 1,20,000 − 2,400 = ₹1,17,600. ₹1,18,800 results from using only 1 month, and ₹1,22,400 wrongly adds the discount.
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