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During its accounting year end to 31 May 20X7, Jupiter Co unexpectedly received a receipt of $382 in relation to a debt which had been written off earlier during the year.
What accounting entries should Jupiter Co make to update the general ledger to reflect this situation?
A Debit Bank $382 Credit Sundry income $382
B Debit Bank $382 Credit Receivables $382
C Debit Bank $382 Credit Allowance for receivables $382
D Debit Bank $382 Credit Irrecoverable debts $382
Answer in the book is option D. I think option A is correct. Please kindly explain this sir.Answer D is correct.
The debt had been written off (and so we would have debited irrecoverable debts with the expense).
When the cash is received we debit cash and credit irrecoverable debs (which cancels the expense).
I do explain this in my free lectures on irrecoverable and doubtful debts.
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