8. Endorsement of Bill
Endorsement of a bill means the Process of transferring the title of bill from the drawer or holder to their creditors.
The person transferring the title is called " Endorser" and the person to whom the bill is transferred called 'Endorsee'. The endorsee can further endorse the bill in favour of his creditors.
Endorsement is executed by putting the signature at the back of the bill.
9. Bill sent for Collection
Bill sent for Collection It is a process when the bill is sent to the bank with instructions to keep the bill till maturity and collect its amount from the acceptor on the date of maturity.
10. Dishonour of Bill
When the drawee (or acceptor) of the bill fails to make payment of the bill on the date of maturity, it is called 'Dishonour of Bill?
11. Noting of Bill
To obtain the proof of dishonour of a bill, it is re-sent to the drawee through a legally authorized persons called Notary Public. Notary Public charges a small fee for Providing this service known as noting charges.
Noting charges are paid to the Notary Public first by the holder of the bill but are ultimately recovered from the drawee, because he is the person responsible for the dishonour.
12. Retirement of a Bill
When the drawee makes the payment of the bill before its due date it is ,called 'Retirment of a bill'.
In such a case, holder of the bill usually allow a certain amount as Rebate to the drawee.
Amount of rebate is calculated at a fixed percentage for the unexpired period only.
Illustration 3
On 1st January, 2011 A sold good to B for Rs. 30,000 and drew upon him a bill at 3 months for the amount. B accepted the bill and returned it to A. On 4th March, 2011, B retired the bill under rebate of 12% per anum. Calculate the amount of Rebate.
B will pay ` 29,700 (` 30,000 - ` 300) to A at the time of retiring the bill.
13. Renewal of a Bill
Sometimes, the drawee of a bill finds himself unable to meet the bill on due date. To avoid dishonouring of bill, he may request the holder of the bill to cancel the original bill and draw a new bill in place of old one. It the holder agrees, the old bill is cancelled and a new bill with new terms is drawn on the drawee and also accepted by him. This process is called 'Renewal of a bill'.
In this case, Noting of the bill is not required as cancellation of the bill is mutually agreed upon by both the parties of the bill.
Normally, the drawer charge interest for the period of new bill. The interest may be paid in cash or may be added in the amount of new bill. If any part payment is made at the time of renewal of a bill, interest is calculated only on the outstanding amount.
Illustration 4
Narender requests Rajneesh to renew his acceptance for ϕ 25,000 for 3 months
together with interest @ 18% p.a.
Calculate the amount of new bill drawn on Narender
Amount of New Bill = Rs 25,000 + Rs 1,125 = Rs 26,125
Amount Outstanding = Amount of Bill cancelled – any part payment made in cash at the time of renewal of bill
CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari )
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