bills receivable

the question given is ( based on retirement of partners. IPCC Accounts module pg.14.37): 

Bills receivable dishonoured Rs.5000 on 31-12-2008 but not recorded in books. Dishonour of bill was due to insolvency of customer. Debtors is Rs.50000.

Here, 1 implication would be that 5000 shall be deducted from bills receivable a/c. (given in book)

Whether debtors a/c in balance sheet would also be affected? Is it also a bad debt arising? (No effect for this is given in book. I m not undersatnding as to why it would have no effect on debtors.)

Kindly reply soon.

Replies (4)

There might be possibility that bill was discounted with bank.

Originally posted by : Rushi

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

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