Question

A debtor owes $850 and is declared bankrupt. He is, however able to pay $0.40 on every dollar owed. How will his payment be recorded?

a. DR CASH $850 CR DEBTOR $850
b. DR CASH $340 CR DEBTOR 340
c. DR DEBTOR $850 CR CASH $850
d. DR DEBTOR $340 CR CASH $340​

Answer 1

BIT B IS THE CORRECT ANSWER

Step-by-step explanation:

AS IT IS GIVEN IN QUESTION THAT THE DEBTOR IS ABLE TO PAY $0.40 ON PER DOLLAR.

WHICH MEANS BUSINESS RECEIVED 850×0.40/100 =$340

THE DEBTOR PAID $340

THE JOURNAL ENTRY IS

CASH A/C DR $340

BADDEBTS A/C DR $340

TO DEBTOR A/C $680

THIS IS THE CORRECT ANSWER BUT IT'S NOT IN THE OPTION THAT'S WHY ANSWER IS BIT B) .

THANK YOU