Question

Journal entry:-

sohan who owes Rs 10,000 became insolvent, only 50 paise in a rupee is received

Answer 1

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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reason for debit and credit

Sohan A/c - Personal A/c , hes is liable to pay to us . hes the giver therefore its credited

Cash A/c - Real A/c , money comes into the business therefore its debited

Bad debts - Nominal A/c - Its the loss to the business , money doesn't receive from sohan therefore its debited

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Journal entry

Cash A/c            Dr  5000

Bad debts A/c   Dr  5000

        To Sohan A/c                10000

(being 50 paise is received from sohan out of debt of Rs .10000 )

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#50 Paise is received from due of 10000 therefore cash =  10000*0.5 = 5000

Remaining 5000 is declared as bad debt

Answer 2

Explanation:

Total amount = 10,000

Amount received=70paise

70paise convert into rupees

=70/100=0.7

Bad debts a/c will be debited by

=10,000*0.7=7,000