Question

dinesh was declared insolvent ans payment of 60paisa in a ₹recived from his estate by cheque

Answer 1

Total debt (recoverable) = x

actually Recovered = 0.60paise

x×0.60= 0.60x

Non Recoverable= 1 - 0.60x= 0.40x . Amounts to Bad debts..
its a loss...

The transaction affects three accounts... dinesh account (he owes money) , bank a/c(recieved 60 paise Per rupeeby Cheque) , Bad debts a/c(40 paise Per rupee is unrecoverable)..

dinesh account is a Personal account (as the name suggests)

bank account is a Real account (All the assets and Liabilities come under Real account; cash is an asset)

Bad debts account is a nominal account (All expenses incomes gains losses come under nominal account and Bad debts is a loss)


The Three golden rules of accounting are..

Personal account - Debit the receiver credit the giver..

Nominal account - Debit All expenses and losses, credit All incomes and gains

Real account - Debit what comes in ,credit what goes out.

in contention with the above rules..

dinesh should be credited (he is the giver)

Bad debts should be debited (its a loss)

bank account should be debited (it is comingin).


So the journal Entry will be...

bank a/c Dr 0.60x

Bad debts a/c Dr 0.40x

To dinesh a/c. x

(Being dinesh account settled)

Answer 2

Answer:

Answer:

Journal entry [1]

Dinesh - Dr 14,000

To Sales - 14,000

Now

Journal Entry to Dinesh

Bank A/c -Dr 8,400

Bad Debṭs A/c -Dr 5,600

To Dinesh 14,000

Explanation:

Hope this answer will be helpful for you ☺️