bills receivable

There might be possibility that bill was discounted with bank.

Firstly the bill is dishonoured the entry will be -

Debtors    A/c         Dr        5000

   To Bills recievable   A/c           5000

however the debtor has became insolvent the amount now will become bad debts Entry will be...

Bad debts     A/c      Dr    5000

    To Debtors A/c                        5000

in short no effect on debtors A/c....

i agree with manoj,

u can pass a compound entry as follows

Bad Debts A/c.................................Dr 5000

       To Bills Receivable A/c                              5000