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mrjonbain.
mrjonbain.-
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gaeunn
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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
mrjonbain
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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.
gaeunn
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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
mrjonbain
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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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