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Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonny’s estate. How much amount of bad debt will be recorded in the books of Bobby:
  • a)
    12,500
  • b)
    9,437
  • c)
    11,687
  • d)
    13,650
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately acc...
Calculation of Bad Debt:

Step 1: Calculate the amount of the bill:
The bill amount is Rs 25,000.

Step 2: Calculate the discount amount:
The bill was discounted at 18% per annum for a period of 2 months.

Using the formula for simple interest:
Discount = (Bill Amount * Rate * Time) / 100

Discount = (25,000 * 18/100 * 2/12) = Rs 750

Step 3: Calculate the amount realized from Bonny's estate:
The amount realized from Bonny's estate is 50 paise.

To convert paise to rupees, divide by 100:
Amount realized = 50 paise / 100 = Rs 0.50

Step 4: Calculate the bad debt amount:
The bad debt amount is the difference between the bill amount and the amount realized.

Bad Debt = Bill Amount - Amount Realized = Rs 25,000 - Rs 0.50 = Rs 24,999.50

Step 5: Round off the bad debt amount to the nearest rupee:
Since the bad debt amount is in paise, it needs to be rounded off to the nearest rupee.

Rounded off Bad Debt = Rs 24,999.50 (rounded off to Rs 25,000)

Therefore, the amount of bad debt recorded in the books of Bobby is Rs 12,500 (Option A).
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Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonnys estate. How much amount of bad debt will be recorded in the books of Bobby:a)12,500b)9,437c)11,687d)13,650Correct answer is option 'A'. Can you explain this answer?
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Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonnys estate. How much amount of bad debt will be recorded in the books of Bobby:a)12,500b)9,437c)11,687d)13,650Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonnys estate. How much amount of bad debt will be recorded in the books of Bobby:a)12,500b)9,437c)11,687d)13,650Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonnys estate. How much amount of bad debt will be recorded in the books of Bobby:a)12,500b)9,437c)11,687d)13,650Correct answer is option 'A'. Can you explain this answer?.
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