Ram owes Rs 1,00,000 to Shyam Trading Company. He has become bankrupt & has shown that he cannot repay the money to Shyam Trading company. Which of the following is correct in this situation?

Ram`s personal account is credited

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Bad debts account is credited

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Bad debts account is debited

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A & C both

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Solution

The correct option is D
A & C both

In case of bad debt, bad debts account is debited as it is loss to the entity & debtor`s account is credited.

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Ram owes Rs 1,00,000 to Shyam Trading Company. He has become bankrupt & has shown that he cannot repay the money to Shyam Trading company. Which of the following is correct in this situation?

The correct option is D A & C both In case of bad debt, bad debts account is debited as it is loss to the entity & debtor`s account is credited.

The correct option is D
A & C both

In case of bad debt, bad debts account is debited as it is loss to the entity & debtor`s account is credited.