What is ‘Retirement of a Bill of Exchange’? - Book Keeping and Accountancy

Question

What is ‘retirement of a bill of exchange’?

Solution

A bill of exchange is said to be retired if its acceptor makes payment of it before its due date, usually after deducting some discount or rebate.

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Accounting Treatment - Retaining the Bill Till Due Date. Honour Or Dishonour, Insolvency of the Drawee Or Acceptor

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Q 1.A.5 Q 1.A.4 Q 1.B.1

2016-2017 (March)

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2016-2017 (March) (with solutions)

Q 1.A.5 | 1 mark

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An honour of bill means payment in accordance with the apparent tenor of the bill.

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2. Somnath renews his acceptance of Rs. 14,400 to Kedarnath by paying cash Rs. 4,400 and accepting a new bill for 2 months for the balance plus interest @ 12% p.a.

3. Vishwanath retired his acceptance for Rs. 10,500 to Kedarnath by paying in cash Rs. 10,250

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For the amount receivable Ms. Jaya draws a bill on Ms. Maya, on 1st January, 2010 for Rs 54,000, for a period of 4 months.

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