The following accounting entries are made when bad debt is recovered

Assessment: JAMB UTME - Principles of Accounts - 2015 Subject: Financial Accounting

Question 1 Report

The following accounting entries are made when bad debt is recovered
Answer Details
When bad debt is recovered, the appropriate accounting entries to be made depend on the original entry made when the bad debt was written off. Assuming that the original entry was a debit to bad debt expense account and a credit to accounts receivable: The correct accounting entry when bad debt is recovered is to debit the accounts receivable account and credit the bad debt recovered account. This reflects the fact that the amount owed by the customer is being received and the previously written-off bad debt is being reversed. Therefore, the correct option is: debit debtors accounts and credit recovered account.
Read lesson note on Nature And Significance Of Accounting (JAMB)
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