Â Before discussing how to do discounting of the bill easily in order to solve Discounting of the Bill Homework Answers one must know what a bill of exchange stands for, what its uses are and several other factors. Here we are going to briefly discuss all the topics that one must familiarize himself with in order to get their homework done and learn the topic conceptually in the long run.
So the first question that comes to our mind while going into details about discounting of the bill is that what is the bill of exchange?
The bill of exchange is a written agreement or more specifically an order that one party writes to another demanding a certain amount of money. This usually occurs when one party provides the other party with some service on credit or sells products to the other party on credit. The party that draws the bill is known to be the drawer or the endorser of the bill and the party that needs to accept the bill is called the acceptor or the endorsee. The drawer is usually the creditor and the acceptor is usually the debtor.
What are the uses of the bill of exchange?
Before attempting to solve Discounting of the bill homework Answers a student must familiarize him with the purpose of drawing a bill. The purpose of drawing a bill is for the written proof that the debtor must pay his debts to the creditor. The bill is signed by the endorsee and it is a proof that he shall and will the amount of money from the debtor. The bill also serves the purpose of marking a specific date within which the payments must be done and after which the bill will become due for payment. This period of time that defines the time within which the bill must be paid is known as the tenor period. The bill of exchange is as good as money that is it can be counted as money owned by the endorser of the bill of exchange.
What is meant by discounting of the bill?
Sometimes the drawer or endorser of the bill of exchange may be in dire need of money and needs the amount mentioned in the bill before the due date. For this purpose he may sell the bill to any bank at a specific rate of discount. The bill is drawn by the endorser who signs it and states the amount that must be now paid to the bank within a due date. The bank then becomes the holder and possesses the bill. On receiving the bill the bank pays the cash to the drawer. The amount paid by the bank is equal to the face value minus the interest or discount at a specified rate over a specific period of time. The process mentioned above is known to be the Discounting of the Bill.
Before trying to solve Discounting of the Bill Homework Answers a student must go through few examples. Here I have explained one such problem which will help understand an individual about the technique and concepts associated with the discounting of the bill.
Say, the endorse has a bill of $2000. If the endorser discounts this bill to his bank at a rate of 20%, 3 months before its due date then the discount may be calculated as:
2,000 x 20/100 x 3/12 = 100
This means that the endorser will get the return value in cash as (2,000-100) =1900. That is, he will bear a loss of $100.
What the bank does is that it keeps this bill till the due date. Once the bill matures (maturity occurs on the due date) the bank hands over the bill to the debtor that is the acceptor and receives the money from him. The bank receives this money once the bill is honored. If the acceptor misses the payment or refuses to pay to the bank, then the endorser of the bill will be held liable to pay the amount to the bank.
This portrays the scenario of the contingent liability that is a liability that may or may not arise, depending on a certain event. Thus until the due date comes the endorser may be uncertain about whether he has to pay to the bank or not. Once the bill is discounted by the holder certain records are passes in the journals of the endorser, endorsee as well as the intermediary organization that is the bank. Once the bill is accepted by the endorsee, certain changes occur in the journal of the endorser. There is an increase in the bank balance with the amount equivalent to the face value of the bill minus the discount. There will be a loss equivalent to the amount of discount and there will be a decrease in the bill receivable asset. These are the changes that are noticed in the endorserâ€™s book of records. On the other hand the book of the bank will hold the following changes. There will be an increase in assets as well as liabilities as it transfers some amount to the endorser and increase in revenue from the discount that is offered by the drawer of the bill of exchange.
What is the easiest way to solve Discounting of the Bill Homework Answers?
Students tend to miss lectures due to their hectic schedule and often miss out on important topics. This does not seem to affect them until and unless they are forced to do homework assignments. For this kind of problem there is always the option to go online and seek help from experts. This saves both time and money. The solutions are usually written in the simplest form so that the students can understand them and even get to learn about the topic discussed. The solutions are completely genuine and free from plagiarism and most importantly they are delivered within a stipulated deadline.
So the easiest way to solve Discounting of the Bill Homework Answers is to seek help online.