The document discusses bills of exchange, including:
- Parts of a bill of exchange like drawer, drawee, payee
- Advantages of bills of exchange for exporters/creditors
- Accounting entries for bills of exchange in the books of the drawer and drawee at different stages like acceptance, payment, discounting, dishonoring
- Examples are provided of journal entries for various bill of exchange transactions in the books of both parties
This document provides an overview of various banking operations including the roles of collecting and paying bankers, types of lending facilities, and non-performing assets. It discusses the duties of collecting bankers to carefully collect checks and notify customers of dishonored checks. Paying bankers must take precautions when honoring checks and can refuse payment for specific reasons. Banks offer various lending facilities like loans, cash credits, overdrafts and letters of credit. Non-performing assets are loans where borrowers do not repay principal or interest for a certain period.
Paying banker and collecting banker b.v.raghunandan-chapter 6SVS College
This document discusses the roles and responsibilities of paying bankers and collecting bankers. It outlines various precautions paying bankers must take, such as verifying the nature of the cheque, branches, references, signatures, and balances. It also describes circumstances where cheques may be dishonored, such as countermanding, notice of death or insolvency. The document provides statutory protections for paying bankers and outlines duties of collecting bankers, such as prompt presentation, crediting, and noticing of dishonors. It defines holder in due course and describes potential liability for collecting bankers in cases of conversion, defective titles, or violating crossing restrictions.
1) The document discusses bank reconciliation statements, which reconcile a business's bank account records with its bank statement each month.
2) A bank reconciliation statement lists adjustments like unpresented checks and uncredited deposits to explain differences between the ending balances in the bank account and bank statement.
3) It walks through preparing a bank reconciliation statement step-by-step, including updating the bank account, identifying reconciling items, and completing the statement to show equal ending balances.
Letter of Credit - Complete Presentation - (Bcom-Mcom-BBA-MBA-BS)Millat Afridi
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. A letter of credit is extremely common within international trade and goods delivery, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as underwriting the credit risk of the buyer paying the seller for goods.
The document discusses key definitions and concepts related to banking law in India. It defines terms like "banker" and "customer" and outlines how the legal relationship between them is established. It also examines the various roles and duties of a banker, including as a debtor, trustee, agent, and bailee. The document also discusses exceptions to the general duty of confidentiality bankers owe to customers, as well as how the banker-customer relationship can be terminated.
The document discusses the roles and responsibilities of collecting bankers and paying bankers when dealing with cheques. It outlines two options a customer has when receiving a cheque - depositing it directly or sending it to their banker for collection. It explains that a collecting banker can act as a holder for value or as an agent, and describes the conditions under which they are considered a holder for value. The duties of paying bankers to verify cheque details and ensure sufficient funds are also summarized. Finally, it discusses the statutory protections provided to collecting and paying bankers if they act in good faith and without negligence.
,
letter of credit
,
parties involved in lc transaction
,
letter of credit process
,
commercial letter of credit flow
,
advantages of letter of credit
,
risks involved
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. If the buyer is unable to pay, the bank will cover the remaining amount. Letters of credit are important for international trade due to distance between parties and differing laws. There are two main types of letters of credit - sight credits where payment is made immediately upon document presentation, and usance credits where payment is made on a future date. Standby letters of credit are used to secure loans and allow payment if the applicant fails to perform. Letters of credit reduce risks for sellers and transfer credit risk from buyers to banks.
This document provides an overview of various banking operations including the roles of collecting and paying bankers, types of lending facilities, and non-performing assets. It discusses the duties of collecting bankers to carefully collect checks and notify customers of dishonored checks. Paying bankers must take precautions when honoring checks and can refuse payment for specific reasons. Banks offer various lending facilities like loans, cash credits, overdrafts and letters of credit. Non-performing assets are loans where borrowers do not repay principal or interest for a certain period.
Paying banker and collecting banker b.v.raghunandan-chapter 6SVS College
This document discusses the roles and responsibilities of paying bankers and collecting bankers. It outlines various precautions paying bankers must take, such as verifying the nature of the cheque, branches, references, signatures, and balances. It also describes circumstances where cheques may be dishonored, such as countermanding, notice of death or insolvency. The document provides statutory protections for paying bankers and outlines duties of collecting bankers, such as prompt presentation, crediting, and noticing of dishonors. It defines holder in due course and describes potential liability for collecting bankers in cases of conversion, defective titles, or violating crossing restrictions.
1) The document discusses bank reconciliation statements, which reconcile a business's bank account records with its bank statement each month.
2) A bank reconciliation statement lists adjustments like unpresented checks and uncredited deposits to explain differences between the ending balances in the bank account and bank statement.
3) It walks through preparing a bank reconciliation statement step-by-step, including updating the bank account, identifying reconciling items, and completing the statement to show equal ending balances.
Letter of Credit - Complete Presentation - (Bcom-Mcom-BBA-MBA-BS)Millat Afridi
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. A letter of credit is extremely common within international trade and goods delivery, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as underwriting the credit risk of the buyer paying the seller for goods.
The document discusses key definitions and concepts related to banking law in India. It defines terms like "banker" and "customer" and outlines how the legal relationship between them is established. It also examines the various roles and duties of a banker, including as a debtor, trustee, agent, and bailee. The document also discusses exceptions to the general duty of confidentiality bankers owe to customers, as well as how the banker-customer relationship can be terminated.
The document discusses the roles and responsibilities of collecting bankers and paying bankers when dealing with cheques. It outlines two options a customer has when receiving a cheque - depositing it directly or sending it to their banker for collection. It explains that a collecting banker can act as a holder for value or as an agent, and describes the conditions under which they are considered a holder for value. The duties of paying bankers to verify cheque details and ensure sufficient funds are also summarized. Finally, it discusses the statutory protections provided to collecting and paying bankers if they act in good faith and without negligence.
,
letter of credit
,
parties involved in lc transaction
,
letter of credit process
,
commercial letter of credit flow
,
advantages of letter of credit
,
risks involved
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. If the buyer is unable to pay, the bank will cover the remaining amount. Letters of credit are important for international trade due to distance between parties and differing laws. There are two main types of letters of credit - sight credits where payment is made immediately upon document presentation, and usance credits where payment is made on a future date. Standby letters of credit are used to secure loans and allow payment if the applicant fails to perform. Letters of credit reduce risks for sellers and transfer credit risk from buyers to banks.
The document provides information on opening letter of credit procedures, including:
- Defining key parties in an LC transaction such as the issuing bank, beneficiary, applicant, and advising bank.
- Describing the 5 major steps in an LC transaction: issuing, advising, amendment, presentation, and settlement.
- Explaining types of LCs like revolving, back-to-back, transferable, and standby credits.
- Listing documents required for opening an LC like the application form, proforma invoice, insurance cover note, and import registration.
- Noting banks must check applicant signature, proforma invoice acceptance, importer entitlement, and restricted items
This document discusses letters of credit and the parties involved in a letter of credit transaction.
- Letters of credit are arrangements issued by banks to facilitate international commercial transactions by providing security for payments between buyers and sellers if certain terms and conditions are met.
- They involve an applicant/buyer, beneficiary/seller, issuing bank, advising or correspondent bank, confirming bank, reimbursing bank, and negotiating bank.
- The issuing bank opens the letter of credit at the request of the applicant/buyer. The beneficiary/seller then presents documents to the negotiating bank to receive payment if the documents meet the terms of the letter of credit.
Paying Banker and Collecting Banker-B.V.RaghunandanSVS College
The document discusses the precautions a paying banker must take when processing cheques as well as the circumstances under which a cheque may be dishonored. It also outlines the statutory protections provided to paying bankers if payment is made in due course. Additionally, it defines a collecting banker and their duties which include prompt presentation, crediting of customer accounts, and notice of dishonour. Collecting bankers are provided statutory protection if they act in good faith and without negligence when collecting cheques for customers.
The document discusses key concepts related to banking. It defines a banker as someone who accepts deposits that can be withdrawn by cheque and uses those deposits to make loans and investments. It also defines a customer as anyone who maintains a bank account. The relationship between banker and customer is described as debtor-creditor, principal-agent, and other specialized relationships like bailee-bailor and mortgagor-mortgagee. The document also outlines key obligations of bankers like honoring checks, maintaining confidentiality, and handling accounts of deceased customers.
A letter of credit is a document from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. The document protects both parties in an international trade transaction. It is issued by an issuing bank on behalf of the buyer and states that the bank will pay the seller upon presentation of documents meeting the letter's terms. There are several parties involved including the applicant, beneficiary, issuing bank, advising bank, paying bank, and confirming bank. The letter of credit process involves the applicant applying to the issuing bank, which then issues the letter to the advising and beneficiary banks to facilitate payment from the buyer to the seller.
The document discusses letter of credit, which is a payment mechanism in international trade. It defines key terms like applicant, beneficiary, issuing bank. It describes different types of letters of credit like revocable, irrevocable, confirmed, sight, usance, back-to-back and transferable letters of credit. It also discusses standby letters of credit and fees involved like opening charges, retirement charges. Finally, it mentions some common uses of export letters of credit.
The document discusses key definitions and concepts relating to the banker-customer relationship under UK law, including:
1) The definition of a bank focuses on collecting deposits, paying cheques, and keeping customer accounts. A customer relationship is formed upon account opening.
2) Regulations include various Banking Codes covering retail, business, and mortgage customers. The Data Protection Act governs use of customer data.
3) Key implied terms in the banker-customer contract include duties to repay deposits, honour valid instructions, give notice before account closure, and maintain confidentiality of customer information.
لابد لمحاسب الاعتمادات أن يكون على علم بكافة القيود والمعالجات المحاسبية الخاصة بالاعتمادات المستندية والمعالجة المحاسبية بتختلف حسب نوع الاعتماد وحسب طبيعة التعامل مع المورد والبنك والمعالجات المحاسبية لانواع الاعتمادات المستندية من اهم الامور التي ينبغي على المحاسب أن يكون على علم بطريقة تسجيلها ومتابعتها
The document discusses the roles and responsibilities of a collecting banker when handling cheque collections. It outlines that a collecting banker can act either as a holder for value or as an agent of the customer. As a holder for value, the collecting banker enjoys rights similar to a holder in due course. As an agent, the banker must take precautions to avoid liability for conversion. The document also discusses the statutory protection provided to collecting bankers under Section 131 of the Negotiable Instruments Act if they collect payment in good faith and without negligence. It provides examples of negligence and outlines various duties and precautions collecting bankers must follow.
The document summarizes key concepts related to international trade finance including risks, contracts, payment methods, letters of credit, collections, and discrepancies. It discusses commercial and political risks, elements of a sales contract, Incoterms rules, payment methods like cash in advance and letters of credit, the letter of credit process, types of letters of credit, and implications of discrepancies.
Documentary collection is one of the widely used payment methods in international trade. Partes involved in collections, types etc are discussed further in the presentation.
The document discusses the Negotiable Instruments Act of 1881 in India. It defines key terms like negotiable instruments, promissory notes, bills of exchange, and cheques. It outlines the essential characteristics of negotiable instruments like property, title, rights, and presumptions. It also summarizes the key elements and differences between promissory notes, bills of exchange, inland/foreign bills, time/demand bills, trade/accommodation bills, and cheques as defined by the Act.
A collecting banker undertakes to collect amounts from cheques and bills for customers by presenting them to the paying banker. As an agent of the customer, the collecting banker has duties to exercise reasonable care and diligence in the collection process. They must present cheques and bills promptly to avoid losses from insolvency, provide timely notice if an item is dishonored, and present bills for acceptance at an early date to fix the maturity date. If the collecting banker fails in these duties and a loss occurs, they are responsible to the customer.
This document discusses the roles and responsibilities of paying bankers and collecting bankers. It defines a paying banker as the banker who holds the account of the drawer of a cheque and is obligated to make payment if funds are sufficient. The key duties of a paying banker are to honor valid customer cheques in a timely manner according to law. A collecting banker undertakes to collect payment on cheques and other instruments from the paying banker on behalf of customers, and has duties to exercise care during collection and notify customers of dishonored cheques. The document also outlines circumstances where bankers may rightfully dishonor cheques and their liabilities for wrongful dishonor.
This document provides definitions and explanations of key concepts related to cheques and cheque crossing in India. It begins by introducing cheques and their importance as a negotiable instrument. It then defines a cheque and outlines its essential elements. The document discusses different types of cheques such as bearer, ordered, uncrossed, crossed, antedated, postdated and stale cheques. It also covers other instruments like bank drafts and travelers cheques. Key points of crossing cheques and distinguishing features between cheques and bills of exchange are presented. Advantages of printed cheque books and permissible alterations are summarized. Overall, the document serves as a comprehensive reference on cheques and related topics under Indian laws.
The document provides information about bank reconciliation. It explains that bank reconciliation is the process of matching a business's financial records to its bank records to identify any differences. The goal is to find and resolve discrepancies between the two sets of records. It discusses why bank reconciliation is important for businesses, including identifying errors, determining actual cash available, and reducing risk of theft. The document also defines key terms related to reconciling items like unrecorded deposits, unpresented checks, and bank charges and interest.
Human: Thank you for the summary. Can you summarize the specific bank reconciliation example provided in the last section of the document?
Unit 2 (different means of remittance) (As per syllabus 2017-18)Dr Isha Jaiswal
The document discusses different means of remittance, including internal and international transfers. It describes various instruments used for remitting funds such as demand drafts, mail transfers, traveler's cheques, and letters of credit. Letters of credit are defined as documents from a bank guaranteeing payment to a seller if delivery conditions are met. The key parties in a letter of credit are identified as the applicant, issuing bank, beneficiary, advising bank, confirming bank, negotiating bank, and reimbursing bank. Specific types of letters of credit are also outlined like travelers' letters of credit and letters of credit for commercial transactions.
This document summarizes a seminar on cheques given by five students. It defines a cheque, outlines the essential features of a valid cheque, and describes the different types of cheques. It also discusses endorsement of cheques, the roles and responsibilities of a paying banker and collecting banker, circumstances for dishonoring a cheque, and the protections provided to paying and collecting bankers under Indian law.
There are two types of cheque crossings: general and special. A general crossing involves drawing two parallel transverse lines on the cheque with optional words like "and company" or "not negotiable" written between the lines. A special crossing involves writing the name of a banker across the cheque, with optional words like "not negotiable". The crossings provide directions to the paying banker to not pay the cheque over the counter and ensure the money is paid into an account, making the recipient traceable.
This document provides an overview of bills of exchange, including:
1) It defines a bill of exchange as a written order by a maker directing payment of a sum to a payee.
2) It outlines the key parties (drawer, drawee, payee), features (written, unconditional order, payment date), and types (trade, accommodation).
3) It discusses the accounting treatment for various bill of exchange scenarios when retained, discounted, endorsed, sent for collection, etc.
A bill of exchange is a written order from one party (drawer) to another (drawee) requiring the drawee to pay a specified sum on a specified date. There are three parties to a bill of exchange: the drawer, drawee, and payee. A bill can be inland (drawn and payable within the same country) or foreign (drawn in one country and payable in another). Bills of exchange provide advantages like serving as evidence of debt, enabling convenient transfer of debt, and allowing creditors to sue for payment. They can also be discounted before the due date to provide funds to the holder. Proper recording of bills receivable, bills payable, discounting, and collection is
The document provides information on opening letter of credit procedures, including:
- Defining key parties in an LC transaction such as the issuing bank, beneficiary, applicant, and advising bank.
- Describing the 5 major steps in an LC transaction: issuing, advising, amendment, presentation, and settlement.
- Explaining types of LCs like revolving, back-to-back, transferable, and standby credits.
- Listing documents required for opening an LC like the application form, proforma invoice, insurance cover note, and import registration.
- Noting banks must check applicant signature, proforma invoice acceptance, importer entitlement, and restricted items
This document discusses letters of credit and the parties involved in a letter of credit transaction.
- Letters of credit are arrangements issued by banks to facilitate international commercial transactions by providing security for payments between buyers and sellers if certain terms and conditions are met.
- They involve an applicant/buyer, beneficiary/seller, issuing bank, advising or correspondent bank, confirming bank, reimbursing bank, and negotiating bank.
- The issuing bank opens the letter of credit at the request of the applicant/buyer. The beneficiary/seller then presents documents to the negotiating bank to receive payment if the documents meet the terms of the letter of credit.
Paying Banker and Collecting Banker-B.V.RaghunandanSVS College
The document discusses the precautions a paying banker must take when processing cheques as well as the circumstances under which a cheque may be dishonored. It also outlines the statutory protections provided to paying bankers if payment is made in due course. Additionally, it defines a collecting banker and their duties which include prompt presentation, crediting of customer accounts, and notice of dishonour. Collecting bankers are provided statutory protection if they act in good faith and without negligence when collecting cheques for customers.
The document discusses key concepts related to banking. It defines a banker as someone who accepts deposits that can be withdrawn by cheque and uses those deposits to make loans and investments. It also defines a customer as anyone who maintains a bank account. The relationship between banker and customer is described as debtor-creditor, principal-agent, and other specialized relationships like bailee-bailor and mortgagor-mortgagee. The document also outlines key obligations of bankers like honoring checks, maintaining confidentiality, and handling accounts of deceased customers.
A letter of credit is a document from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. The document protects both parties in an international trade transaction. It is issued by an issuing bank on behalf of the buyer and states that the bank will pay the seller upon presentation of documents meeting the letter's terms. There are several parties involved including the applicant, beneficiary, issuing bank, advising bank, paying bank, and confirming bank. The letter of credit process involves the applicant applying to the issuing bank, which then issues the letter to the advising and beneficiary banks to facilitate payment from the buyer to the seller.
The document discusses letter of credit, which is a payment mechanism in international trade. It defines key terms like applicant, beneficiary, issuing bank. It describes different types of letters of credit like revocable, irrevocable, confirmed, sight, usance, back-to-back and transferable letters of credit. It also discusses standby letters of credit and fees involved like opening charges, retirement charges. Finally, it mentions some common uses of export letters of credit.
The document discusses key definitions and concepts relating to the banker-customer relationship under UK law, including:
1) The definition of a bank focuses on collecting deposits, paying cheques, and keeping customer accounts. A customer relationship is formed upon account opening.
2) Regulations include various Banking Codes covering retail, business, and mortgage customers. The Data Protection Act governs use of customer data.
3) Key implied terms in the banker-customer contract include duties to repay deposits, honour valid instructions, give notice before account closure, and maintain confidentiality of customer information.
لابد لمحاسب الاعتمادات أن يكون على علم بكافة القيود والمعالجات المحاسبية الخاصة بالاعتمادات المستندية والمعالجة المحاسبية بتختلف حسب نوع الاعتماد وحسب طبيعة التعامل مع المورد والبنك والمعالجات المحاسبية لانواع الاعتمادات المستندية من اهم الامور التي ينبغي على المحاسب أن يكون على علم بطريقة تسجيلها ومتابعتها
The document discusses the roles and responsibilities of a collecting banker when handling cheque collections. It outlines that a collecting banker can act either as a holder for value or as an agent of the customer. As a holder for value, the collecting banker enjoys rights similar to a holder in due course. As an agent, the banker must take precautions to avoid liability for conversion. The document also discusses the statutory protection provided to collecting bankers under Section 131 of the Negotiable Instruments Act if they collect payment in good faith and without negligence. It provides examples of negligence and outlines various duties and precautions collecting bankers must follow.
The document summarizes key concepts related to international trade finance including risks, contracts, payment methods, letters of credit, collections, and discrepancies. It discusses commercial and political risks, elements of a sales contract, Incoterms rules, payment methods like cash in advance and letters of credit, the letter of credit process, types of letters of credit, and implications of discrepancies.
Documentary collection is one of the widely used payment methods in international trade. Partes involved in collections, types etc are discussed further in the presentation.
The document discusses the Negotiable Instruments Act of 1881 in India. It defines key terms like negotiable instruments, promissory notes, bills of exchange, and cheques. It outlines the essential characteristics of negotiable instruments like property, title, rights, and presumptions. It also summarizes the key elements and differences between promissory notes, bills of exchange, inland/foreign bills, time/demand bills, trade/accommodation bills, and cheques as defined by the Act.
A collecting banker undertakes to collect amounts from cheques and bills for customers by presenting them to the paying banker. As an agent of the customer, the collecting banker has duties to exercise reasonable care and diligence in the collection process. They must present cheques and bills promptly to avoid losses from insolvency, provide timely notice if an item is dishonored, and present bills for acceptance at an early date to fix the maturity date. If the collecting banker fails in these duties and a loss occurs, they are responsible to the customer.
This document discusses the roles and responsibilities of paying bankers and collecting bankers. It defines a paying banker as the banker who holds the account of the drawer of a cheque and is obligated to make payment if funds are sufficient. The key duties of a paying banker are to honor valid customer cheques in a timely manner according to law. A collecting banker undertakes to collect payment on cheques and other instruments from the paying banker on behalf of customers, and has duties to exercise care during collection and notify customers of dishonored cheques. The document also outlines circumstances where bankers may rightfully dishonor cheques and their liabilities for wrongful dishonor.
This document provides definitions and explanations of key concepts related to cheques and cheque crossing in India. It begins by introducing cheques and their importance as a negotiable instrument. It then defines a cheque and outlines its essential elements. The document discusses different types of cheques such as bearer, ordered, uncrossed, crossed, antedated, postdated and stale cheques. It also covers other instruments like bank drafts and travelers cheques. Key points of crossing cheques and distinguishing features between cheques and bills of exchange are presented. Advantages of printed cheque books and permissible alterations are summarized. Overall, the document serves as a comprehensive reference on cheques and related topics under Indian laws.
The document provides information about bank reconciliation. It explains that bank reconciliation is the process of matching a business's financial records to its bank records to identify any differences. The goal is to find and resolve discrepancies between the two sets of records. It discusses why bank reconciliation is important for businesses, including identifying errors, determining actual cash available, and reducing risk of theft. The document also defines key terms related to reconciling items like unrecorded deposits, unpresented checks, and bank charges and interest.
Human: Thank you for the summary. Can you summarize the specific bank reconciliation example provided in the last section of the document?
Unit 2 (different means of remittance) (As per syllabus 2017-18)Dr Isha Jaiswal
The document discusses different means of remittance, including internal and international transfers. It describes various instruments used for remitting funds such as demand drafts, mail transfers, traveler's cheques, and letters of credit. Letters of credit are defined as documents from a bank guaranteeing payment to a seller if delivery conditions are met. The key parties in a letter of credit are identified as the applicant, issuing bank, beneficiary, advising bank, confirming bank, negotiating bank, and reimbursing bank. Specific types of letters of credit are also outlined like travelers' letters of credit and letters of credit for commercial transactions.
This document summarizes a seminar on cheques given by five students. It defines a cheque, outlines the essential features of a valid cheque, and describes the different types of cheques. It also discusses endorsement of cheques, the roles and responsibilities of a paying banker and collecting banker, circumstances for dishonoring a cheque, and the protections provided to paying and collecting bankers under Indian law.
There are two types of cheque crossings: general and special. A general crossing involves drawing two parallel transverse lines on the cheque with optional words like "and company" or "not negotiable" written between the lines. A special crossing involves writing the name of a banker across the cheque, with optional words like "not negotiable". The crossings provide directions to the paying banker to not pay the cheque over the counter and ensure the money is paid into an account, making the recipient traceable.
This document provides an overview of bills of exchange, including:
1) It defines a bill of exchange as a written order by a maker directing payment of a sum to a payee.
2) It outlines the key parties (drawer, drawee, payee), features (written, unconditional order, payment date), and types (trade, accommodation).
3) It discusses the accounting treatment for various bill of exchange scenarios when retained, discounted, endorsed, sent for collection, etc.
A bill of exchange is a written order from one party (drawer) to another (drawee) requiring the drawee to pay a specified sum on a specified date. There are three parties to a bill of exchange: the drawer, drawee, and payee. A bill can be inland (drawn and payable within the same country) or foreign (drawn in one country and payable in another). Bills of exchange provide advantages like serving as evidence of debt, enabling convenient transfer of debt, and allowing creditors to sue for payment. They can also be discounted before the due date to provide funds to the holder. Proper recording of bills receivable, bills payable, discounting, and collection is
The document provides information about various payment documents and methods used in business transactions. It defines key documents like invoices, pro forma invoices, and statements of account that are used to record payments and transactions between buyers and sellers. It also outlines different payment methods including bank transfers, checks, letters of credit, cash on delivery and more. Specific examples and definitions are provided for certain payment documents and methods.
The document discusses various topics related to local transaction banking:
1. Opening a current account for a new customer and providing specimen signatures.
2. Notifying of a change in authorized signatures on accounts.
3. Requesting cancellation of a lost cheque and issuing a replacement.
4. Advising a customer that their account is overdrawn and suggesting arranging overdraft facilities.
5. Requesting a meeting to discuss an overdraft or loan to expand one's business.
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The document provides details about an accounting for business program by Afterscho☺ol Centre for Social Entrepreneurship. It includes instructions for participants to prepare trading and profit and loss accounts based on transaction details provided for a business owner named Goti for the year ended 31 March 2007. It also provides an additional information and asks participants to prepare a balance sheet as on that date.
This material is a part of our PGPSE programe. Our programme is available for any student after class 12th / graduation. AFTERSCHO☺OL conducts PGPSE, which is available free to all online students. There are no charges. PGPSE is a very rigorous programme, designed to give a comprehensive training in social entrepreneurship / spiritual entrepreneurship. This programme is aimed at those persons, who want to ultimately set up their own business enterprises which can benefit society substantially. PGPSE is a unique programme, as it combines industry consultancy, business solutions and case studies in addition to spirituality and social concerns. You can read the details at www.afterschoool.tk or at www.afterschool.tk
Mr. A sold goods to Mr. B for $20,000 on credit and drew a three-month bill of exchange on Mr. B for the same amount, which Mr. B accepted. On the due date, Mr. B honored the bill as due. The document also provides examples of a bill being dishonored, bills being discounted by drawers with banks, bills being endorsed to a third party, and bills being sent to banks for collection.
This document provides information about hire purchase transactions. Some key points:
- Hire purchase allows a purchaser to acquire an asset by paying in installments over time, while the seller retains ownership until full payment is made. Both parties benefit - the purchaser gets immediate use and credit, while the seller increases sales and recovers financing costs.
- Terms include hire vendor (seller), hire purchaser (buyer), cash price, down payment, hire purchase installments, and hire purchase price (total paid including interest).
- Several examples are provided to illustrate how to calculate installment amounts, total hire purchase price, and accounting entries for both parties. Depreciation and interest expenses are accounted for.
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The document provides an overview of the Negotiable Instruments Act of 1881. It defines key terms like negotiable instrument and discusses the characteristics of negotiable instruments. It outlines the three main types of negotiable instruments - promissory notes, bills of exchange, and cheques. For each type, it provides examples and discusses their essential elements. It also compares and contrasts promissory notes and bills of exchange, and discusses additional qualifications for cheques. Finally, it covers topics like crossing of cheques and the different types of crossing.
Negotiable instruments include promissory notes, bills of exchange, and cheques. They are written documents that entitle the holder to payment of a sum of money. They are transferable by delivery or endorsement and delivery, which transfers ownership and the right to payment. The three main types are promissory notes, which contain an unconditional promise to pay; bills of exchange, which contain an order to pay; and cheques, which are drawn on a bank and payable on demand. For an instrument to be negotiable, it must be in writing, for a definite sum of money, and unconditionally promise or order payment on demand or at a future date.
PT ABC recorded various transactions related to accounts receivable in August 2010, including credit sales, cash receipts, and sales returns. To record these transactions, PT ABC will make journal entries debiting and crediting appropriate accounts like accounts receivable, sales, cash, and sales returns. PT ABC also tracked accounts receivable balances by customer to aid in collection and recorded allowances for doubtful accounts and write-offs of uncollectible receivables.
A negotiable instrument is a written document that allows ownership rights to be transferred freely. The key characteristics are that it contains an unconditional promise to pay a certain sum of money, is in writing, and is freely transferable through delivery or endorsement. The main types of negotiable instruments are promissory notes, bills of exchange, and cheques. A promissory note contains a promise to pay, a bill of exchange contains an order to pay, and a cheque is a bill of exchange drawn on a bank and payable on demand.
The document discusses journal entries for various types of business transactions including purchases, sales, expenses, banking transactions, and discounts. It provides examples of journal entries for purchasing goods for cash or credit, selling goods for cash or credit, paying expenses like salaries and wages, banking activities like depositing and withdrawing cash, and allowing trade or cash discounts to customers. It also discusses complex entries for bad debts, bad debts recovered, withdrawals by the owner, and various types of common banking transactions.
This document provides information about consignment accounting. It defines key terms like consignor, consignee, commission. It explains that the consignor sends goods to the consignee to sell on their behalf. The consignee sells the goods and sends an account sales statement to the consignor, showing the sales, expenses deducted, commission earned, and balance due. It provides an example transaction and the corresponding ledger entries in the books of the consignor.
The document discusses subsidiary books of accounts which are used to record transactions of similar nature at one place. It explains key subsidiary books like purchase book, sales book, purchase return book, sales return book, bills receivable book, bills payable book and cash book. It also discusses the advantages and disadvantages of maintaining subsidiary books. Maintaining subsidiary books divides the accounting work, ensures specialization and prevents errors but it also requires more resources and knowledge.
Deed of Agreement Purchase SBLC 35+2 RWA_Payment Guarantee_Security DepositSGT K. K. Group
This document outlines an agreement for the purchase of a standby letter of credit (SBLC) between a seller and buyer. Key details include:
- The SBLC will have a face value of €000,000,000 or $000,000,000, with an initial tranche of the same amount.
- The purchase price is 35% of the face value plus 2% consultant fees.
- The buyer must pay a refundable security deposit of €250,000-€650,000 before the seller will provide the SBLC via SWIFT messages.
- The transaction involves multiple steps of payment guarantees, SWIFT messages, verification, payment, and hard copy delivery
This document provides an overview of negotiable instruments including definitions, characteristics, types and parties. It defines a negotiable instrument as a written document that allows rights to be transferred. The main types discussed are promissory notes, bills of exchange, and cheques. Key characteristics include being freely transferable, granting rights to the holder, containing a promise or order to pay a certain amount in writing. The document outlines the elements and parties for each type of instrument, as well as the liabilities of those parties.
This document is a dissertation submitted by Priyanshi Gurung for the partial fulfillment of a Bachelor of Business Administration degree from Shri Guru Ram Rai University. It discusses letter of credit and includes an introduction describing letter of credit, its mechanism and parties involved. It also provides an example of how a letter of credit transaction works between an Indian exporter and a US importer. The dissertation is certified as Priyanshi Gurung's original work and includes acknowledgments, table of contents, and the beginning of the first chapter which provides further details about letter of credit.
1. Invested Rs. 2,000 in shares of Tata Cotton Mills Ltd.
2. Placed order with Mr. Shah for goods worth Rs. 1,500.
3. Invoiced goods to Mr. Love for Rs. 1,000 after allowing 2% trade discount and paid carriage and freight.
4. Paid rent in goods, sold old car and invested proceeds in business, and wrote off bad debt of Rs. 250 from Mr. Gobind.
The document discusses provisions for bad debts and doubtful debts. It provides examples of accounting entries for bad debts, provisions for bad debts, increasing or decreasing provisions based on changes in debtors balances. It also discusses provisions for discounts on debtors to account for potential discounts customers may receive upon payment. Key points covered include debiting bad debts and provisions to the profit and loss account, and extracting relevant balances for debtors, provisions for bad debts and discounts in the balance sheet.
The document provides information on accounting procedures for non-trading organizations, including receipts and payments accounts, income and expenditure accounts, balance sheets, and subscription adjustments. It includes examples of preparing these accounts from sample organizational financial data. Key points covered are:
1) Receipts and payments accounts summarize cash transactions, while income/expenditure accounts are like profit/loss statements.
2) Balance sheets for non-trading organizations list accumulated funds instead of capital.
3) Subscription accounts require adjustments to determine amounts transferred between accounts.
4) The examples demonstrate preparing the various accounts from raw financial information.
- The document discusses single entry bookkeeping, including definitions, advantages and disadvantages, and how to prepare statements of affairs and profit/loss.
- It provides examples of statements of affairs and profit/loss calculations for businesses keeping single entry records.
- Steps for preparing statements of affairs and converting single entry records to double entry bookkeeping are also outlined.
The manufacturing account shows a production cost of 9,300 consisting of direct material, direct labor, and overhead expenses. Trading account shows a cost of sales of 8,800, gross profit of 700, and sales of 9,500. The balance sheet lists assets of 6,000 including machinery and current assets, and capital of 6,000.
The journal proper is used to record transactions that cannot be entered in subsidiary books like sales returns, purchases returns, and cash books. It contains the date, account debited, account credited, amount, and narrative explaining the transaction. Examples of entries in the journal proper include purchases of fixed assets on credit, sales of fixed assets on credit, and opening entries to record assets, liabilities, and capital on the first day of business.
Depreciation is the reduction in the value of fixed assets over time due to wear and tear, age, or obsolescence. There are three main methods of calculating depreciation: straight-line, diminishing balance, and revaluation. Straight-line depreciation allocates an equal amount of depreciation expense each year, diminishing balance allocates higher depreciation amounts in early years that decrease over time, and revaluation depreciates assets based on annual reappraisals of their value. Proper recording of depreciation expense is important for financial reporting and calculating net income.
This document discusses different types of errors that may occur in bookkeeping and how to correct them. It describes errors that do not affect the trial balance, such as errors of omission, commission, principle, original entry, compensating errors, and complete reversal of entry. It also discusses errors that do affect the trial balance, which are revealed by a disagreement in the trial balance totals. A suspense account is used to temporarily record differences until the errors are located and corrected through journal entries. Examples are provided of each type of error and how to make the correcting journal entries.
- The document discusses control accounts used by large businesses to manage transactions between the firm and its customers (sales ledger) and suppliers (purchases ledger).
- Control accounts act as a summary of amounts owed to and by the firm. They are constructed by recording transactions such as sales, purchases, cash receipts/payments, returns, and discounts in a ledger account.
- Examples are provided of constructing sales and purchases ledger control accounts from sample transaction data. Exercises are also given for learners to practice preparing control accounts.
This document discusses accounting adjustments made at the end of a trading period. Specifically, it addresses adjusting accounts for expenses due but not paid (accrued expenses), prepaid expenses, income earned but not received (outstanding receipts), and income received in advance (prepaid income). Examples are provided for each type of adjustment, showing how to record the adjustments in the relevant expense or income accounts, profit and loss account, and balance sheet. The purpose is to accurately capture all revenues and expenses in the appropriate accounting period in order to determine the true profit or loss for the period.
Life skills like leadership, teamwork, positive relationships, self-worth and confidence are important for surviving in a competitive world undergoing rapid change. Good leadership involves vision, role modeling, effective communication, and motivating followers. Teamwork allows groups to achieve more and improves cooperation. Positive relationships are important for cooperation, peace, and community development. Self-worth and confidence empower individuals, stimulate creativity and accountability, and help people avoid risky behaviors. Developing these key life skills is essential for individuals and societies to adapt and thrive.
This document discusses poverty in Tanzania. It defines poverty and identifies two types: absolute and relative. It then outlines several indicators of poverty including low per capita income, low technology use, and high mortality rates. Several causes of poverty in Tanzania are explained such as climate change, low technology application, diseases, and colonial legacy. The effects of poverty include inability to meet basic needs, high dependency on donors, and increased illiteracy and crime. The document also examines strategies that Tanzania has used to alleviate poverty, such as Ujamaa villages and eliminating school fees, and discusses their effectiveness and challenges.
This document defines key concepts related to economic and social development. It discusses two types of development - economic development shown through improvements in agriculture, industry, trade, and material production, and social development shown through improvements in education, health, transportation, and other social services. Development can be measured at the individual level, looking at factors like education and income, and at the national level, looking at indicators such as per capita income, life expectancy, and literacy rates. Financial institutions like banks and non-banks play an important role in economic development by mobilizing savings and providing loans, investments, and employment opportunities. Both government and private sectors contribute to development through policies, trade, infrastructure, and production of goods and services.
Transport involves the movement of people, goods, and services from one place to another. There are several elements of transport including the way or path taken, the unit of carriage used, the method of propulsion, and terminals for loading and unloading. Transport is important as it promotes trade, develops regions, provides employment, creates utility of goods and services, provides variety, links producers and consumers, generates revenue, moves workers, and eliminates scarcity. However, the transport industry in Tanzania faces problems such as weather effects, hilly terrain, expensive bridge construction, traffic jams, and highway robbers. Efforts have been made to address these problems through liberalization of trade, construction of all-weather roads, and
This document discusses various topics related to money and banking, including:
- The evolution of money from barter trade to commodity money to coins and notes.
- The functions of money as a medium of exchange, unit of account, and store of value.
- Banking services like loans, overdrafts, drafts, and different types of cheques.
- Qualities of good money and the demand for money for transaction, precautionary, and speculative motives.
- Differences between money and capital, and forms of money like coins, banknotes, and deposits.
This document provides an overview of marketing concepts including definitions of marketing, the marketing mix, types of markets, and market structures. It defines marketing as identifying and satisfying consumer demand through a system of activities to plan, price, promote, and distribute goods and services. The marketing mix consists of the 4Ps - product, price, promotion, and place. Markets are classified by type of goods (commodity, input, financial) and structure (perfect competition, monopoly, monopolistic competition, oligopoly). Market structures differ based on the number of sellers, product differentiation, and barriers to entry.
International trade involves the importing and exporting of goods and services between countries. There are several reasons for international trade, including allowing countries to obtain goods they cannot produce themselves and sell surplus goods. Trade can occur between two countries (bilateral) or multiple countries (multilateral). The main advantages of international trade are that it enables countries to access a greater variety of goods and promotes specialization. Some disadvantages include over-reliance on one export good and the potential for imported goods to have harmful effects. Key terms involved in international trade include imports, exports, balance of trade, balance of payments, and various shipping terms that determine responsibilities for costs.
Communication involves conveying information from one person to another. There are three main methods of communication: writing and reading, talking and listening, and using signs. Factors like urgency, distance, need for details, confidentiality, need for reference, and costs determine the best communication method. Recent developments in Tanzania include the introduction of cellular phones, public pay phones, privatization of telecommunications, improved mail delivery services, internet access, and electronic mail.
Advertising is used to inform customers about new and existing products or services. It provides information on price, quality, name, what is offered, and where to obtain the product. The main goals of advertising are to increase sales, introduce new products, promote branded goods, improve company image, gain more retail outlets, and outcompete rivals. Common forms of advertising media include television, radio, newspapers, posters, cinema, neon signs, direct mail, and trade fairs. Choosing an advertising medium depends on factors like cost, target audience, geographical coverage, and number of people reached.
This document provides information about web development and creating webpages. It discusses using software like HTML, FrontPage, and text editors to design pages with headers, navigation bars, and common layouts. The document explains how to preview pages, publish them to a server so others can access the site, and the difference between a single webpage and an entire website. Key topics covered include HTML tags, page structure, outlining a site map, and hosting a site on an internal or external server.
Mpact of information and communication technology (ict) on the societyKAZEMBETVOnline
ICT has had a significant impact on society. It has transformed education, industry, banking/business, communication, entertainment and more. However, it has also introduced some disadvantages like unemployment, privacy issues, lack of job security, and health risks. To address security issues, techniques like backups, encryption, access controls, passwords, firewalls and intrusion detection are used. Overall, ICT has changed nearly every aspect of modern life while also presenting new challenges around its use.
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
বাংলাদেশের অর্থনৈতিক সমীক্ষা ২০২৪ [Bangladesh Economic Review 2024 Bangla.pdf] কম্পিউটার , ট্যাব ও স্মার্ট ফোন ভার্সন সহ সম্পূর্ণ বাংলা ই-বুক বা pdf বই " সুচিপত্র ...বুকমার্ক মেনু 🔖 ও হাইপার লিংক মেনু 📝👆 যুক্ত ..
আমাদের সবার জন্য খুব খুব গুরুত্বপূর্ণ একটি বই ..বিসিএস, ব্যাংক, ইউনিভার্সিটি ভর্তি ও যে কোন প্রতিযোগিতা মূলক পরীক্ষার জন্য এর খুব ইম্পরট্যান্ট একটি বিষয় ...তাছাড়া বাংলাদেশের সাম্প্রতিক যে কোন ডাটা বা তথ্য এই বইতে পাবেন ...
তাই একজন নাগরিক হিসাবে এই তথ্য গুলো আপনার জানা প্রয়োজন ...।
বিসিএস ও ব্যাংক এর লিখিত পরীক্ষা ...+এছাড়া মাধ্যমিক ও উচ্চমাধ্যমিকের স্টুডেন্টদের জন্য অনেক কাজে আসবে ...
Thinking of getting a dog? Be aware that breeds like Pit Bulls, Rottweilers, and German Shepherds can be loyal and dangerous. Proper training and socialization are crucial to preventing aggressive behaviors. Ensure safety by understanding their needs and always supervising interactions. Stay safe, and enjoy your furry friends!
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
RPMS TEMPLATE FOR SCHOOL YEAR 2023-2024 FOR TEACHER 1 TO TEACHER 3
Bill of exchange
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BILL OF EXCHANGE
Bill of exchange is legally defined as unconditional order in writing addressed by one person to
another signed by a people to whom is addressed to Pay on demand at a fixed or determine future
time sum certain in money to the order of a specified person or to the bearer.
PARTS FOR THE BILL OF EXCHANGE.
DRAWER: Is the one who draws / write the bill of exchange.
DRAWEE: He/she is a person to whom the bill is addressed, he become an acceptor as soon
as he has signified this under taking to comply with the order contained on the
bill.
PAYEE: Is a person or firm to whom or to whose order payment is to be made.
SPECIMEN TO BILL OF EXCHANGE
100,000 SAME 15TH
JAN 2013
Three month after the date pay
ALLY BAKARI or his order
The sum of one hundred thousand shilling (100,000)
To
CHAMBO
DAUDI EMIL FAHMI
From the Example:
Emil Fahmi - Is a drawer
CHAMBO DAUDI -Is a drawee
Ally Bakari or his order - Is a payee
ADVANTAGES OF THE BILL OF EXCHANGE
- It enable an exporter /creditor to obtain cash soon after good are dispatched
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- The creditor may get money by discounting the bill
- He/she fixed the date of payment and if payment is not made, a creditor can sure on
the
Evidence of the bill of exchange he/she sells.
- The debtor also benefit by getting credit facilities
THE FOLLOWING ARE SOME USEFUL ILLUSTRATIVE PROBLEM ON BILLS
TRANSACTION UNDER THE FOLLOWING CIRCUMSTANCES
- Where the bill received is retained by the drawer.
- Where the drawer endorse the bill (more than one endorsement).
- Where the drawer endorse the bill (only one endorsement).
- Where the bill endorsed by drawer by drawer and then discounted by the endorsee.
- Dishonoured for the bill.
- Renew the bill.
BILL RECEIVABLE.
The person to receive the money on the bill of exchange regards it as a bill receivable
Therefore the trader drawer a bill of exchange on his customer he records the details of the bill
on the bill’s Receivable book.
When the drawer received back the bill of exchange he can act in one of the following
- Hold the bill of exchange until maturity.
- Discounting the bill.
- Transfer the bill to another person who them requires all the right to it.
PAYMENT OF THE BILL ON MATURITY
a. On the books of the drawer
I when goods sold on credit
DR: Personal a/c with sales amounts
CR: Sales A/C
ii- When drawee accepts the bill of exchange
DR: Bills receivable with value of the bill.
DR: Drawee
iii- When bill made on maturity (honoured).
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DR: Cash at Bank
CR: Bill receivable
b. In the books of Drawee
i. When goods bought on credit.
DR: Purchases with the value of goods
CR: Drawers a/c bought.
ii. When bill drawn by the drawer accepted.
DR: Drawer with the amount of
CR: Bill payable the bills.
When at maturity the bills paid off
DR: Bills payable
CR: Cash at Bank
Example
Good has been sold by Hashimu to Mussa 1st for 200,000. A bill has been drawn end up by
Hashim and accepted by Musa, the date of maturity being 31st March, Hashim keep the bill of
exchange until the maturity then presented for payment. The bill was honored.
Required;
Show journal entries and accounts in the book Drawer and Drawee.
Solution:
In the books of Drawer (Hashim).
DR SALES A/C CR
1/1 Musa 200,000
DR MUSSA A/C CR
1/1 sales 200,000
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DR BILL RECEIVABLE A/C CR
1/1 Mussa 200,000 31/3 Bank 200,000
DR BANK A/C CR
31/3 bill receivable 200,000
JOURNAL ENTRIES
DATE DETAILS DR CR
1-Jan i. Musa 200,000
Sales 200,000
-Being goods sold on credit.
1-Jan ii. Bills receivable 200,000
Mussa 200,000
-Being bill of exchange accepted
31/3. iii. Bank 200,000
Bills receivable 200,000
-Being bill of exchange honoured.
In the books of Drawee (Mussa).
DR PURCHASES A/C CR
Hashimu 200,000
DR HASHIMU A/C CR
purchases 200,000
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DR BILL PAYABLE A/C CR
Hashimu 200,000
DR BANK A/C CR
Bill payable 200,000
JOURNAL ENTRIES
Date Details DR CR
Purchases
Hashim
Being: Goods purchased on credit
200,000
200,000
200,000
200,000
200,000
200,000
Hashim
Bill payable
Being: Bill of exchange Accepted
Bill payment
Bank
Being: Bill of exchange honoured
EXERCISE
Jumanne bought goods from Mwakipesile valued Tshs 4900/= on 1st Feb 1986. The
bill was for three month credit the bill was drawn by
Mwakipesile and accepted by Jumanne on the same date on due date the
bill was paid by the drawee on maturity date
Required
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a) Ledger account
b) Journal entries in the books of Jumanne
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2. IF THE BILL OF EXCHANGE DISCOUNTING AT THE BANK
Example
Simple sold goods to Tembo 1st April for 300,000 and draw a bill of exchange to him on that
date for 3 months which he accepted, on 2nd April Simba discounting the bill. The discount
change being 4,000 the bill was honored
Required;
Show Journey Entries in the books of Drawer and Drawee
JOURNAL ENTRIES
Date Details DR CR
1/4 Temba
Sales
Being: Goods sold on credit
300,000
300,000
1/4 Bill Receivable
Temba
Being B.E. Accepted
300,000
30,000
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2/4 Bank
Bill Receivable
Being: B.E discounted
300,000
300,000
2/4 Discount charges
Bank
Being: D changers transferred to P&L
4,000
4,000
2/4 Profit and loss
Discount charges
Being: D charges trended to P&L
4,000
4,000
DR SALES A/C CR
Temba 300,000
DR TEMBA A/C CR
sales 300,000
DR BILL RECEIVABLE A/C CR
Temba 30,000 Bank 300,000
DR BANK A/C CR
Bill receivable 300,000
DR DISCOUNT CHARGE A/C CR
Bank 30,000 P&l 300,000
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NOTE
No entry on the books of drawer concerning the discount for bill of exchange
JOURNAL ENTRY DR CR
1/4 Purchases
Simba
Being: Goods on credit
300,000
300,000
300,000
300,000
30,000
30,000
1/4 Simba
Bill Payable
Being: B.E Accepted
Bill payable
Bank
Being: B.E honoured
EXERCISE
Show the journal entries and the ledgers A/c to record the following in the books of C. Kombo
Jan 3 sold goods to D. Daima for 400,000, D. Daima accept the Bill on the same date. Bill
payable after 3 month discounted the bill at Bank for 394,000 Bill honoured by D. Daima.
Solution:
In the books of C. Kombo
Date Details DR CR
3/1 D. Daima
Sales
Being: Goods sold on credit
400,000
400,000
400,000
3/1 Bill Receivable
D. Daima
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10
Being B.E. Accepted
394,000
400,000
394,000
Bank
Bill Receivable
Being: D. Change by Drawer
DR SALES A/C CR
D. Daima 400,000
DR D.DAIMA A/C CR
sales 400,000
DR BILL RECEIVABLE A/C CR
D. Daima 400,000 Bank 400,000
DR BANK A/C CR
bill receivable 400,000
DR DISCOUNTING CHARGE A/C CR
Bank 6,000 P&l 6,000
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11
DR PROFIT AND LOSS A/C CR
Discounting charge 6,000
DISHONORED OF THE BILL OF EXCHANGE
When the debtor acceptor fails to make payment on maturity the bill it said to be
DISHONORED.
ACCOUNTING ENTRIES.
-In the books of drawer.
i) When the bill is dishonored by drawee
DR: Personal A/C (Drawee) with the value of bill
DR: Bill receivable
ii) When noting charge paid by Drawee
DR: Drawee A/C with the amount of noting charge.
CR: Bank or Cash A/c
iii) When noting charge transfer to drawers A/c
DR: Cash or Bank
CR: Drawee account
-In the books of drawee
i) When at maturity the bill is dishonored
DR: Bill payable A/C with the value of bill
CR: Drawer A/c
ii) When the bill plus noting charge are paid off
DR: Drawer a/c
DR: Noting charge a/c
CR: Cash/ bank with the amount.
EXAMPLE
On 1st June Twaha sold goods to Pinda for 500,000. A bill of exchange with maturity date of
August was drawn up and accepts by Pinda.
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12
On August Bill of exchange presented to pinda but he fails to pay it and the bill is therefore
dishonoured. The bill is noted the entry being 20,000 which initially paid by Twaha.
Required.
-Show the accounting entries in the books of Twaha and Pinda
JOURNAL ENTRIES
Date Details DR CR
1/6 Pinda a/c
Sales a/c
Being: Goods sold on credit
500,000
500,000
500,000
20,000
20,000
500,000
50,000
500,000
20,000
20,000
1/6 Bill Receivable
Pinda a/c
Being B.E. Accepted
Pinda a/c
Bill receivable A/c
Being: B.E Dishonoured
Noting charge
Bank
Being: Noting has paid by drawer
4/8
Pinda a/c
Noting charge
Being: Noting charge has paid
by drawee
In the books of Drawee (PINDA).
DR PURCHASES A/C CR
Twaha 500,000
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DR TWAHA A/C CR
Bill
payable 500,000 purchases 500,000
Bill
payable 500,000
DR BILL PAYABLE A/C CR
Twaha 500,000 Twaha 500,000
DR BANK A/C CR
Noting charge 20,000
DR NOTING CHARGE A/C CR
Bank 20,000
JOURNAL ENTRIES
Date Details DR CR
1/6 Purchases a/c
Twaha a/c
Being: Goods sold on credit
500,000
500,000
500,000
50,000
1/8 Twaha a/c
Bill payable a/c
Being B.E. Accepted
Bill payable a/c
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4/8 Twaha a/c
Being: B.E Dishonoured
500,000
20,000
500,000
20,000
4/8 Pinda a/c
Noting charge
Being: Noting charge paid
by drawee.
EXERCISE
Asha sold goods to Bahati Tshs 300/= on 1st Jan 1990 Bahati accepted bill for
three months and Asha discounted it with the banker for Tshs 280/= on
due date the bill was paid by Bahati
Required
Journal entries and ledger in the books of Asha and Bahati
IN THE BOOKS OF ASHA
Workings:
Discounting charge = face value of the bill−cash received from the bank
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IN THE BOOKS OF DRAWEE
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NB
Discounting of the bill of exchange
To discount the bill means to collect money from the bank before the
due date (maturity date )
To discount the bill of exchange means to sell of less value than the face value of the
bill
What the bank will do , is to pay drawer (seller ) and the recover the
money from the acceptor ( buyer ). At the sometime the bank charge the drawer the
charges is known as discounting charges.
Discount charge = face value of the bill x rate of discount charge x months of the bill.
No any effect in the books of drawee because the bill was discounted by the
drawer and is one who borne the discount charge for selling his bill to
the bank before the maturity date. But drawee has to wait until the date of
maturity so as to present the bill to the bank for payment without knowing that the bill
was discounted by the
drawer , that will enable bank to collect money which has been given to
the drawer during bill discounted.
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IF THE BILL IS DISCOUNTED AND DISHONORED.
Definition
This occurs whereby the bill which was originally discounted by the drawer is now dishonoured
Example.
On 10th March Ahmed owned Salum 200,000 for goods supplied on that date, he accepted a bill
at 3 month for the whole amount.
On March 13 Salum discounted the bill of exchange at bank the discounted charge being 10,000
on the due date Ahmed dishonoured the bill and the noting charge were 15,000.
Required.
-Show accounting entries in the books of drawer
- In the books of Drawer (Ahmed)
JOURNAL ENTRIES
Date Details DR Cr
10/5 Salum a/c
Sales a/c
Being: Goods sold on credit
200,000
200,000
200,000
200,000
200,000
200,000
10/3 Bill receivable a/c
Salum a/c
Being B.E accepted
13/3 Bank a/c
Bill receivable a/c
Being: B.E. discounted
13/3 Discounting charges a/c
Bank a/c
Being: charge paid by drawer
10,000
10,000
10,000
10,000
13/3 Profit & Loss a/c
Discounting charges a/c
Being: D charges transfer to P&l
13/06 Salum a/c
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Bill receivable
Being B.E dishonoured
200,000
15,000
15,000
200,000
15,000
15,000
13/06 Noting charge a/c
Bank a/c
Being noting charge paid by drawer
13/06 Salum a/c
Noting charges a/c
Being charge transfer to drawee
EXERCISE.1 (DISHONOURED BILL)
Nyangeta sold goods on 1st Jan 1990 to Masambe who accepted a bill of exchange on
the same date payable three months times for Tshs 5000 on maturity the
bill was presented to Masambe but failed to pay thus the bill was dishonoured it
was noted and the noting charges amounted to Tshs 200/=
Required
Record the above transaction in the books of drawer and show the journal entries
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IN THE BOOKS OF DRAWER
NB
noting charges is an expenses to the drawer(seller ) therefore should credited in
the bank account in the books of drawer.
EXERCISE.2
Sudi sold of Tshs 4000/= to Chaka who received an
acceptance from Chaka for two months. Sudi discounted the bill with the
banker who charged him 8% discounting charges on maturity the bank failed to
get money from Chaka, thus the bill was dishonoured noting charges amount to
Tshs 350/=
Required:
a) Ledger account
b) Journal entries in the books of drawer.
IN THE BOOKS OF DRAWER
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JOURNAL ENTRIES
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EXERCISE 3
On January 1st 1998 Anna sold goods to Bakari for Tshs 50,000/= and on the same
day drew up him a bill for three month on January 4th 1998 discount it for Tshs
49000/= with the bankers. On due date the bill was dishonored and noting charges
to Tshs 100/=
Required
a) Record the above transaction in the journal of Anna ignore narration
Open the ledger account in the books of Anna
IF THE BILL OF EXCHANGE ENDORSED
This is where by the bill of exchange negotiated (given) to someone else.
Example
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The goods have been sold by Juma to Bakar on 1st Jan 12 for 400,000. A bill of exchange drawn
by Juma and accepted by Bakari on Jan 2012. The date of maturity being 31 March 2012.
The bill is endorsed to Ismail on 3st March. Show
-The ledger and Journal entire in the books of Juma.
JOURNAL ENTRIES
Date Details DR Cr
1/1 Bakari a/c
Sales a/c
Being: Goods sold on credit
400,000
400,000
1/1 Bill receivable a/c
Bakari a/c
Being B.E accepted
400,000
400,000
3/3 Ismail a/c
Bill receivable
Being: B.E. discounted
400,000
400,000
31/3 Bank a/c
Ismail
Being: B.E honoured
400,000
400,000
DR SALES A/C CR
Bakar 400,000
DR BAKAR A/C CR
sales 400,000
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DR BILL RECEIVABLE A/C CR
Bakar 400,000 Ismail 400,000
DR ISMAIL A/C CR
bill receivable 400,000 Bank 400,000
DR BANK A/C CR
Ismail 400,000
EXERCISE.
The goods has been sold by Mcharo to Abubakar and Ahmed for 500,000 and 100,000
respectively on 1st Jan. The bill of exchange drawn by Mcharo and accepted by Abubakari and
Ahamed. The date of maturity being 3rd March, the bill drawn to Abubakar was discounted at
bank by Mcharo for 496,000 on 5th Jan and the another 700,000 bill which drawn to Ahamed
endorsed to Yusuf. Both bill are honored.
Required:
To show the ledger and journal entries in book of drawer.
-In the books of Drawer (Mcharo to Abubakar).
DR SALES A/C CR
Abubakar 500,000
DR ABUBAKAR A/C CR
sales 500,000
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DR BILL RECEIVABLE A/C CR
Abubakar 500,000
DR BANK A/C CR
Bill rec. 500,000 Disc. charge 4,000
DR D. CHARGE A/C CR
Bank 4,000 P&L 4,000
DR PROFIT AND LOSS A/C CR
Disc. charge 4,000
JOURNAL ENTRIES
DATE DETAILS DR CR
1/1 Abubakar a/c
Sales a/c
Being: Good sold on credit
500,000
500,000
500,000
500,000
1/1 Bill receivable a/c
Abubakar a/c
Being: BE Accepted
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5/1 Bank a/c
Bill receivable a/c
Being B.E Discounted
496,000
4,000
4,000
496,000
4,000
4,000
5/1 Discounted charges a/c
Bank a/c
Being: D charges paid by drawer
5/1 Profit & loss a/c
Discounting charge a/c
Being: D charge transferred P&L
In the books of Drawer (Mcharo to Ahmed)
JOURNAL ENTRIES
DATE DETAILS DR CR
1/1 Ahmed a/c
Sales a/c
Being: Good sold on credit
700,000
700,000
700,000
700,000
700,000
700,000
1/1 Bill receivable a/c
Abubakar a/c
Being: B.E Acceptant
5/1 Bill receivable
Ahmed’s a/c
Being B.E Discounted
5/1 Yusuf a/c
Bill receivable a/c
Being: B E endorsed to Yusuf
5/1 Bank a/c
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Yusuf a/c
Being B.E honoured
700,000
700,000
700,000
700,000
RENEWING A BILL OF EXCHANGE
Definition
To renew a bill of exchange means to extend the credit period by the duration of the
bill.
To renew a bill means to extend the maturity date of the bill
This happen when the acceptor (drawer ) of
the bill may not be in the position to honor the
bill on presentation and it may be mutually arrange that he accept a fresh bill(new
bill) in place of the existing one interest is usually added to
the new bill as compensation for the delayed payment
In the books of drawer (seller )
1. When the bill is dishonoured
DR: debtor (drawee ) account
CR: bill receivable account
With the value of the bill
2. When the drawee debtors accept a new bill
DR: bills receivable account
CR: debtor (drawee) account
With the new value of the bill with interest
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3. Interest on the new bill
DR: debtor (drawee) account
CR: interest receivable account
value of interest
4. When the bill is honoured by the debtor
DR: bank account
CR: bills receivable account
With the value of the new bill
Example
On 1st Jan 1981 peter sold goods to
Abdallah valued Tshs 4000/= on three month credit on 1st April
1981 Peter presented his bill to the bank but the bill was dishonored and he
paid 25/= a charge on dishonored bill. It was arranged that he accept fresh bill in
place of the existing one the interest of 50/= was charged
for Abdallah honored the bill
Required:
Show the ledger account and journal in the books of peter
IN THE BOOKS OF DRAWER(PETER )
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Example 2
On 1st Jan 1990 Juma sold goods to Hamis for Tshs 2000/= on three months credit.
Hamis dishonored his obligation to Juma
The bill was noted for Tshs 300/= Hamis accepted a
fresh bill with interest of 400/= on 30th May 1990, Hamis honored the new bill
Required
a) Ledger account
b) Journal entries in the books of accepted and drawer
IN THE BOOKS OF ACCEPTOR
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IN THE BOOKS OF DRAWER
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EXERCISE
Show journal entries and bill and all ledger account to
record the following transaction on the books E.china
June 4. Sold goods on credit of Tshs 5000/= to F.FELL
June 4 bill drawn and accepted by F.FELL Tshs 5180/= to
include interest payable
After 3 months
Sept 7 bill dishonored by F. FELLI
Sept 8. Noting charge paid in cash Tshs 20/=
Sept 9. F.FELI agree to accept new bill for Tshs 5360/= to
include noting and interest
For the further three months period
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Dec 31st F. FELI honored the new bill
IN THE BOOKS OF E. CHINA
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DISCUSSION QUESTIONS
On 1st Feb 2001 Salome for her own accommodation draws upon Thomas a bill for Tshs
5000/= for three months the bill is accepted be Thomas on due date Thomas meets the
bill but her bank account didn’t have a sufficient funds to meet the bill instead she pays
Tshs 2000/= in cash and gives a bill for two month for 3000/= plus interest of 4%
per annum this is dully met on maturity
Required
a) Give the journal entries in the books of Salome ignoring narration
b) Post to the relevant ledger account