Recovery of Bad Debts Previously Written off Journal Entry
Heavy KnowledgeJune 16, 20240
Journal Entry for Recovery of Bad Debts Previously Written Off
When a business recovers bad debts that were previously written off, it needs to reverse the write-off and record the cash received. Here is the journal entry for this transaction:
1. Reversing the Write-Off
Date
Particulars
Debit (₹)
Credit (₹)
2024-06-07
Accounts Receivable A/c
10,000
To Bad Debts Recovered A/c
10,000
(Being reversal of previously written-off bad debts)
2. Recording the Cash Receipt
Date
Particulars
Debit (₹)
Credit (₹)
2024-06-07
Cash/Bank A/c
10,000
To Accounts Receivable A/c
10,000
(Being recovery of previously written-off bad debts received in cash)
Explanation:
Reversing the Write-Off:
Accounts Receivable A/c is debited to reinstate the amount that was previously written off.
Bad Debts Recovered A/c is credited to recognize the recovery of the bad debts.
Recording the Cash Receipt:
Cash/Bank A/c is debited to reflect the cash inflow from the recovery.
Accounts Receivable A/c is credited to clear the reinstated receivable amount.