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Adarsh who owned rs50000 become insolvent .60 paise in a rupee was recieved from his estate . Bad debts a/c will be debited by?
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Adarsh who owned rs50000 become insolvent .60 paise in a rupee was rec...
Debiting of Bad Debts Account


When a person becomes insolvent, his assets are distributed among his creditors. In this case, 60 paise in a rupee was received from his estate. The bad debts account will be debited by the amount of bad debts that were unrecoverable.


Explanation


A bad debt is an amount that is owed to a company but is considered to be uncollectible. When a company sells goods or services, it extends a credit to its customers. However, not all customers pay their bills on time or at all. When a customer defaults on their payment, the company may decide to write off the debt as a bad debt.


When a person becomes insolvent, his debts are divided among his creditors. The creditors receive a portion of the amount owed to them based on the assets available in the estate. In this case, only 60 paise in a rupee was received from the estate. This means that the creditors were only able to recover 60% of the amount owed to them.


The bad debts account is used to track the amount of debt that is considered to be uncollectible. When a debt is written off, it is debited to the bad debts account. When a company receives payment on a bad debt, the bad debts account is credited. In this case, since the debt was not recovered, the bad debts account will be debited by the amount of the debt that is considered to be unrecoverable.


Conclusion


In conclusion, when a person becomes insolvent and his assets are distributed among his creditors, the bad debts account is debited by the amount of bad debts that were unrecoverable. This is because the company has already written off the debt as a bad debt and will not be able to recover the amount owed to them.
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Adarsh who owned rs50000 become insolvent .60 paise in a rupee was recieved from his estate . Bad debts a/c will be debited by?
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Adarsh who owned rs50000 become insolvent .60 paise in a rupee was recieved from his estate . Bad debts a/c will be debited by? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Adarsh who owned rs50000 become insolvent .60 paise in a rupee was recieved from his estate . Bad debts a/c will be debited by? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Adarsh who owned rs50000 become insolvent .60 paise in a rupee was recieved from his estate . Bad debts a/c will be debited by?.
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