I. Answer the following Questions.

1. What is bill of exchange?

2. What do you mean by goodwill?
3. What is endorsement of Bill?
4. What is Noting Charges?
5. Who is Drawer?
I. Drawer : Peterson, Main Road, Jalgaon.

Drawee : Basant, Sandesh, Nandura.

Payee : Uma Chandak, Khamgaon.
Amount : Rs. 2500/-
Period : 2 months.
Date of Bill : 21st January, 1995
Date of Acceptance : 25th January, 1995
II. The average net profit expected in the business by ABC firm is Rs, 36,000 per
year. The average capital employed in the business by the firm is Rs, 2,
00,000. The Rate of interest expected from capital invested in the business is
10%. The remuneration of the partners is estimated to Rs, 6,000 P.a.
Calculate the value of goodwill based on 2 years purchase of super profit.

I. Answer the following Questions.

1. Who is Drawer?
2. Who is Drawee?
3. Who is endorser?
4. Who is payee?
5. What do you mean by goodwill?
I. Drawer : Madhavan nayar, Gandhi
Chauk, Dhamangaon
Drawee : Shri Atul Khatke, Mandrup Road, Solapur
Payee : Shri Ranjeet Chavan, Ambajogi
Amount : Rs. 5,000
Period : 90 days.
Date of Bill : 15th March, 1995
Accepted on : 20th March, 1995
I. Archana purchased goods from Babita on Credit for Rs. 20,000. On next day
Archana paid Rs. 10,000 to Babita and accepted a bill drawn by Babita for the
balance amount for four months. Babita discounted the bill with her bank for
Rs. 9600/- Before the due date Archana approached Babita with a request to
renew the Bill Babita agreed with the condition that Archana should pay Rs.
6000 with interest of Rs. 120 and accept a new bill for the balance. The
arrangement was duly carried out. New bill is met on the due date. Pass journal
entries in the books of Babita.

II. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and
return to Minal. Minal discounted the bill @ 12 % p.a. with the bank. On
Maturity Usha finds herself unable to make payment of the bill and requested
Minal to renew the bill. Minal accepts the proposal on the condition that Usha
should Pay Rs. 2,000 in cash and accept a new bill at one month along with
interest at 10% p.a. These arrangements were carried through. Usha retires
the bill by paying Rs. 3015/- Pass Journal Entries in the books of Usha.

III. M/s Rajesh Trading company earned net profit during the last four years were
Rs, 15,000, Rs, 28,000, Rs, 30,000 & Rs, 40,000. The capital investment made by
the company is 1, 00,000. Normal rate of return on capital is 15 %. The
remuneration of the partners during this period is Rs, 1,000p.a. Good will is valued
at 2 years purchase of average super profit of the above mentioned period.

IV. On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman
accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra
discounted the bill with his bank @ 6% p.a. On due date the bill was dishonoured
and Raman requested Ramchandra to accept Rs. 4,000/- immediately and draw
upon him a new bill for the remaining amount at 3 months together with an interest
at 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal
entries in the books of Ramchandra.

V. Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the
bill for Rs. 10,000/- at 3 months drawn by Premlal. Premlal Discounted the bill with
his bank @ 6 % p.a. on due date the bill was dishonoured and Sunderlal requested
Premlal to accept Rs. 4,000 immediately and draw upon him a new bill for the
remaining amount at 3months together with an interest at 10% p.a. Premlal agreed
and the second bill was duly honoured. Give the Journal entries in the books of
Premlal.