Mr Jaspal Singh who owed us Rs 50,000 became insolvent and paid 40% of this amount. What is
term used for the amount not received ?
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The term used is Bad debts and bad debts are the expense of the business so it appears in the debit size of the business.
In this situation, Mr. Jaspal is the debtor of the business and has become insolvent which means that he is bankrupt and unable to pay all his liabilities. In this case, out of the debt of 50,000, he can pay only 40 %, which means he can pay only 20,000; the remaining 30,000 he cannot pay is called bad debt.
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