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Dear lecturer,
I wonder when we use these double entries for bad debt recovered.
Dr receivable control account
Cr bad debt control account
And
Dr bank
Cr receivable control accountWhen bad debts are recovered, do we have to make both double entries I mentioned above or do we have to make only the second double entry ?
Thank You very much lecturer !
We stopped using the term bad debts a long time ago – it is now irrecoverable debts! 🙂
The correct entry when an irrecoverable debt is recovered is neither of those you have written.
It is Dr Cash Cr Irrecoverable debts expense account.
(Since the debt has previously been written off as irrecoverable, it does not exit in the receivables account).What often happens in exam questions is that the bookkeeper has made a mistake and has Dr Cash Cr Receivables. (They should not have done that, but it is a common mistake in real life).
If you are told that the bookkeeper has done this, then we need to correct it.
In which case we Dr Receivables (to remove the wrong entry) and Cr Irrecoverable debts expense account (which is where it should have gone in the first place).Excuse me, lecturer
I got confused with these. It is from BPP book.
If the payment is received before the end of the period in which the debt was written off.
Dr receivable control account
Cr irrecoverable debt expense and record the receipt in the normal way.
If the payment is received after the end of the period in which the debt was written off.
Dr Bank account
Credit sundry income – irrecoverable debts recoveredTherefore, in the exam question, when the exercise mentioned that the irrecoverable debt which was written off from the previous year was recovered, what transcation should I make ?
Firstly, payment will never ever be received during the same period in which the debt was written off in the exam (and it would be extremely unlikely in real life as well).
So everything you have typed there is simply not relevant for the exam.
Secondly, if (as will be the case in the exam) payment is received in a later period, then the entry will be exactly as I wrote in my previous reply.
I really do suggest that you would be better off leaving your BPP Study Text and watching our free lectures, in order, with the free lectures in front of you. They are exactly the same as the lectures you would receive if you attended a course (and many of them are actually recorded during a live course) and cover everything needed to be able to pass Paper F3 well.
The only book you then need is a current edition of a Revision Kit, because they contain lots of exam standard questions, and practice is absolutely vital.hi sir, i understand the your answer
Dr Cash Cr Irrecoverable debts expense account
but i have a question, for the Irrecoverable debts recovered, how should i present in income statement?
should i include as separate column as an income , or can i just direct offset bad debt?
for eg, this year Irrecoverable debts is 800, Irrecoverable debts recovered is 500, can i show the net Irrecoverable debts 300 in income statement? or should i separate show Irrecoverable debts 800 (expenses), Irrecoverable debts recovered 500 (income ) in income statement?
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