Insolvency of the Bill
When a drawee become bankrupt is called Insolvency of a bill. In case of insolvency first pass dishonour entry.
Bad Debts:- An amount which is not recovered by the drawer from the drawee is called Bad debts. It is a loss to the drawer and profit to the drawee (Deficiency).
Insolvency of the
Bill
Note:- First pass Dishonour Entry
|
In the Books of Drawer |
In the Books of Drawee |
|
Cash/Bank A/c Dr Bad debts A/c Dr To Drawee A/c |
Drawer A/c Dr To Cash/Bank A/c To Deficiency A/c |
