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Written off debt recovery

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Written off debt recovery

  • This topic has 3 replies, 2 voices, and was last updated 1 month ago by mrjonbain.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • July 12, 2022 at 1:37 pm #660340
    gaeunn
    • Topics: 6
    • Replies: 4
    • ☆

    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

    July 12, 2022 at 3:30 pm #660343
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1282
    • ☆☆☆☆☆

    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.

    July 13, 2022 at 4:40 am #660367
    gaeunn
    • Topics: 6
    • Replies: 4
    • ☆

    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

    July 13, 2022 at 6:40 am #660371
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1282
    • ☆☆☆☆☆

    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.

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