Hi, may I know if its true that for debts that are written off but later on paid, the journal entry is Debit cash and credit irrecoverable debt expense without exceptions. I came across a question in an exam kit which debit trade receivables and credit irrecoverable debt and hence the confusion.
Thank you
ACCA Forums
FAWritten off debt recovery
Think the second option could be possible but extremely unusual in practice. Getting a bad debt paid is in itself unusual. I think it could possibly happen if a debt was deemed bad in error for instance and this error was discovered. Curious what others think.
i think its really unusual but the question states that cash receipts($9000) consists of a receivable previously written off($1000), and the answer key states that in the receivables ledger account debit receivables of $1000 cr irrecoverable debt recovered. This is confusing as the study kit states that debt has already been taken out of receivables and cannot be reversed
The fact cash has been received means debt is not bad. I think if payment not received then you couldn't reverse entry. In other words you can't write off a debt then reinstate it on a whim.
Sign in to reply to this topic.