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If our debtor has to pay us 2,00,000 but we could recover only 1,00,000 from him the remaining 1,00,000 will be Discount or Bad Debt??
Answers (7)
Bad debt : these are the debt which we can't recover fully from debtor due to some reasons (mostly becomes insolvent). The remaining amount which can't be recovered is bad debt. Discount : discount is what we are giving to the debtor by our own interest to maintain our business deals or by our kindness to a fellow mate like friend, brother, etc... So the answer is bad debt.
Vijay K
Bad debt : these are the debt which we can't recover fully from debtor due to some reasons (mostly becomes insolvent). The remaining amount which can't be recovered is bad debt. Discount : discount is what we are giving to the debtor by our own interest to maintain our business deals or by our kindness to a fellow mate like friend, brother, etc... So the answer is bad debt.
What you are referring to as discount is actually trade discount and not discount on debtors. Discount on trade receivables/debtors is allowed for early payment of dues by debtor. Suppose, If a trader allowed to his buyer a credit sales of Rs.20,000 for 3 months and if the buyer pays the entire due within 2 months or so, the trader may allow discount on such early payment of debts. This is called as discount on trade receivables/debtors.
