Answer:

Calculation of the amount of Bad Debts:

When a bill is discounted with the bank, the bank pays the bill amount to the drawee before the maturity date and deducts a certain percentage as a discount charge. The drawee is liable to pay the bank the full amount of the bill on the maturity date. However, if the drawee fails to pay the full amount on the maturity date, the bill is said to be dishonoured.

In this case, the bill of Rs.75,000 is discounted with the bank for Rs.72,000. This means that the bank has deducted Rs.3,000 (i.e., 4% of Rs.75,000) as a discount charge. When the bill is dishonoured, the drawee is liable to pay the full amount of the bill, i.e., Rs.75,000, to the bank.

However, the drawee pays only 40% of the bill amount in full settlement. This means that the drawee pays only Rs.30,000 (i.e., 40% of Rs.75,000) to the bank. The remaining amount of Rs.45,000 (i.e., Rs.75,000 - Rs.30,000) is not paid by the drawee.

Therefore, the amount of Bad Debts in this case is Rs.45,000.

Explanation:

Bad Debts are the debts that are not recoverable from the debtors. In other words, Bad Debts are the debts that become irrecoverable due to the financial inability of the debtor or due to any other reason.

In this case, the drawee failed to pay the full amount of the bill on the maturity date, which resulted in the dishonouring of the bill. The drawee paid only 40% of the bill amount in full settlement, which means that the bank could not recover the remaining 60% of the bill amount. Therefore, the remaining amount of Rs.45,000 is treated as Bad Debts.

Bad Debts are treated as an expense in the accounting books of the bank. The amount of Bad Debts is debited to the Bad Debts Expense account and credited to the Accounts Receivable account. This helps in reducing the value of Accounts Receivable and also reflects the true value of the assets of the bank.