Illustration - 3

1. Farhan closed his business due to heavy losses and paid only rs 400. To us in full settlement of his debt of rs. 2000

Cash a/c.            400
Bad debts a/c.  1600
To farhan's a/c.            2000


2. Dhuruv who purchased goods of rs 3000 from us & paid earlier only rs 1200. Is now untraceable.

Bad debts a/c       1800
To dhuruv's a/c.             1800

3. Received rs 1600 from farhan who's a/c was written off last year as a bad debts.

Cash a/c.                                  1600
To bad debts recovered a/c.           1600