F3 Doubtful Debts Allowance Question

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April 1, 2011 at 12:47 pm #47948
svetamega
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What is the treatment of doubtfull (not irrecoverable!) debt (was allowed for in the previous petiod), which was subsequently paid?
Thanks!
April 4, 2011 at 12:18 pm #80564
Anonymous
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we will deduct from receivables an allowance for receivables equal to the amount of any doubtful debt so that the net left in in the financial statement is total receivables
April 4, 2011 at 12:22 pm #80565
tammi
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Hi there,

As you know when treating the irrecoverable debts you make credit entry in the receivables account but with doubtful debts you don’t make any entry in the receivables account. This means when the doubtful debt is paid, the receivables account will be credited as the payment is received.

Hope it helps,
Regards,
Tammi
April 4, 2011 at 5:32 pm #80566
svetamega
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Hi there, thanks a lot!
Regards, Sveta
April 12, 2011 at 1:19 pm #80567
ro1sin
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You would:

Dr Receivables (To increase the asset)
Cr Allowance for Receivables (to decrease the expense)
Using the amount received.

You would then:

Dr Bank/Cash
Cr Receivable
(This is to record the cash transaction)
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