Bills Of Exchange - Class 10 Elements Of Book Keeping And Accountancy - Extra Questions

The payee is the person to whom the amount of bill of exchange is to be paid. The payee can be the drawer himself or the creditor of the drawer.
The payee may change in the following situations:
(a) In case the bill is discounted, the person who has discounted the bill will become the payee;
(b) In case the bill is endorsed in favour of a creditor, the creditor will become the payee.

Drawer is the person who makes or writes the bill of exchange. A seller who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer. The drawer after writing the bill of exchange has to sign it as maker of the bill of exchange.

Drawer is the maker of the bill of exchange. 

A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor.

When a bill is drawn by the creditor upon his debtor, it has to be accepted by the debtor or someone on his behalf. The acceptance made by debtor makes draft a bill.

Drawer, Drawee and the payee are the three parties involved in a bill of exchange.

The term maturity refers the date on which a bill of exchange or a promissory note becomes due for payment. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires instrument is payable.

When the drawee of the bill has funds at his disposal and makes a request to the drawer or holder to accept the payment of the bill before its maturity with some discount. If the holder agrees to do so, this is called the retirement of bill of exchange.

Three.

Maturity of a bill of exchange refers the date on which a bill of exchange to becomes due for payment.

In the Books of Tanu
Journal Entries

Date	Particulars	LF	Amt.(Dr)	Amt.(Cr)
Jan $$1$$	Bills Receivable A/c                 Dr To Harsh (Being acceptance received from Harsh for a month)		$$10,000$$	$$10,000$$
Jan $$1$$	Bank A/c                        Dr Discount A/c                             Dr To Bills Receivable A/c (Being bill discounted with the bank at the rate of $$8\%$$ per annum		$$9,933$$ $$67$$	$$10,000$$
Feb $$4$$	Harsh                    Dr To Bank A/c (Being a cheque sent to Harsh on due date for paying off accommodation bill)		$$10,000$$	$$10,000$$

In the Books of Harsh
Journal Entries

Date	Particulars	LF	Amt.(Dr)	Amt.(Cr)
$$2011$$
Jan $$1$$	Tanu                             Dr To Bills Payable A/c (Being acceptance received for one month)		$$10,000$$	$$10,000$$
Feb $$4$$	Bank A/c                         Dr To Tanu (Being cheque received from Tanu on due date)		$$10,000$$	$$10,000$$
Feb $$4$$	Bills Payable A/c                     Dr To Bank A/c (Being acceptance paid on maturity)		$$10,000$$	$$10,000$$

Rebate is a discount given to a customer at the time of purchase, or money sent to a customer after they've paid the full price. An example of a rebate is a 10% discount on a cell phone at the time of purchase.

The term maturity refers the date on which a bill of exchange of a promissory not becomes due for payment. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires i.e., instrument is payable e.g., if a bill dated March $$15$$ is payable $$30$$ days after date it, falls due on April $$17$$, i.e., $$33$$ days after March $$15$$ if it were payable one month after date, the due date would be April $$18$$, i.e., one month and $$3$$ days after March $$5$$.
Here, we should remember, that there is difference between one month of $$30$$ days, when $$30$$ days are given, we have to count $$3$$ days above $$30$$ days and where one month is given, we count $$3$$ days of grace over a month as it is illustrated in the above example, where one month end on $$15$$ April and date of maturity is $$18$$ April inspite of $$17$$ April.
However, where the date of maturity is a public holiday, the instrument will become due on the preceding business day. In this case, if April $$18$$ falls on a public holiday, then the April $$17$$ will be the maturity date.
But when an emergent holiday is declared under the Negotiable Instruments Act $$1881$$, by the Government of India which may happen to be the date of maturity of a bill of exchange, then the date of maturity will be the next working day immediately after the holiday. e.g., the Government declared a holiday on April $$18$$ which happened to be the day on which a bill of exchange crawn by Gupta upon Verma for Rs. $$20,000$$ became due for payment. Since, April $$18$$ has been declared a holiday under the Negotiable Instruments Act. Therefore, April $$19$$ will be the date of maturity for this bill.

A bill of exchange is a formal document. According to Section $$5$$ of the Indian Negotiable Instrument Act, "A bill of exchange is an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order a certain person or to the bearer of the instrument."
Thus, Bill of Exchange is an unconditional order, given by the maker of the instrument to other person asking him to pay a certain sum of money to him or his order or to the bearer of the document. In this way, we can say that bill of exchange is drawn by the creditor upon a debtor who instructs him to pay a certain sum of money either on demand or on the expiry of certain period. From the above definition and discussion, it is clear that a bill of exchange does not contain an unconditional promise to pay rather it contains an unconditional order to pay.

The person who draws the bill is called the drawer. He gives the order to pay money to the third party. The party upon whom the bill is drawn is called the drawee.