Cash A/c Dr. 20
bad debt A/c Dr. 80
To X A/c 100

Reasons for X becoming insolvent and receiving only 20 paise:

Insolvency is a financial state where a company is unable to pay its debts as they become due. In the case of X, there could be several reasons why the company became insolvent and could only receive 20 paise.

Lack of Profitability:
- One possible reason for X becoming insolvent is the lack of profitability. If the company consistently fails to generate sufficient profits to cover its expenses, it may face a financial crisis and eventually become insolvent.
- This could be due to various factors such as a decline in sales, increased competition, or poor financial management.

Excessive Debt:
- Another reason for insolvency could be excessive debt. If X accumulated a significant amount of debt and was unable to meet its debt obligations, it could lead to insolvency.
- The company may have taken on too much debt through loans, credit lines, or other forms of borrowing, and the inability to repay these debts could have contributed to its insolvency.

Decline in Market Demand:
- A decline in market demand for X's products or services can also contribute to its insolvency. If the company's customer base shrinks or if there is a significant decrease in demand, it can lead to a decrease in revenue and financial difficulties.
- Factors such as changes in consumer preferences, economic downturns, or the emergence of new competitors could result in a decline in market demand.

Poor Financial Management:
- Poor financial management practices can also contribute to X's insolvency. If the company lacked proper budgeting, cash flow management, or financial planning, it may have struggled to maintain its financial stability.
- Inefficient cost control, inadequate financial reporting, or ineffective decision-making can all contribute to financial difficulties and insolvency.

Receiving only 20 paise:
- When a company becomes insolvent, its assets are usually liquidated to repay its creditors. However, if the company's debts exceed its assets' value, the creditors may only receive a fraction of what they are owed.
- In the case of X, it appears that the value of its assets was significantly lower than its outstanding debts, resulting in creditors receiving only 20 paise for each rupee owed.

In summary, X became insolvent due to various reasons such as lack of profitability, excessive debt, decline in market demand, and poor financial management. These factors led to the company's inability to meet its financial obligations, resulting in insolvency. As a consequence, the creditors could only receive 20 paise for each rupee owed due to the lower value of X's assets compared to its debts.