what is journal entry for - Rahul who owned Rs 5000 was declared insolvent and 60 paise in a rupee are received as final compensation

Tapan,

In the above quoted query, you need to understand that the amount receivable by the business was regarded as an Asset for the business (Debtor) in the name of Rahul. However, the inability of Rahul to pay Rs 2,000 (as only 60% of Rs 5,000 is recovered) leads the business to a loss.
Thus, journal entry for the transaction would be:
$$\begin{gathered} \mathrm{Cash} \mathrm{A}/\mathrm{c} \mathrm{Dr}. \mathrm{Rs} 3,000 (Increase in Asset) \\ \mathrm{Bad} \mathrm{Debts} \mathrm{A}/\mathrm{c} \mathrm{Dr}. \mathrm{Rs} 2,000 (Increase in Exp/Loss) \\ \mathrm{To} \mathrm{Rahul}\text{'}\mathrm{s} \mathrm{A}/\mathrm{c} \mathrm{Rs} 5,000 (Decrease in Assets) \end{gathered}$$