Question

Using the direct write off method, a $6,000 balance of the Accounts Receivable was written off. Three months later, the customer unexpectedly pays the $6,000 balance. The journal entry to reverse the previous write off would be:_________-

Answer 1

Answer:

Debit Cash accounts $6,000

Credit Bad debt expense (p/l) $6,000

Explanation:

To write off the receivable using the direct method, the entries posted would have been;

Debit Bad debt expense (p/l)  $6,000

Credit Account receivables     $6,000

Being entries to write off accounts receivables gone bad.

To reverse this on payment by the customer after 3 months,

Debit Cash accounts $6,000

Credit Bad debt expense (p/l) $6,000

Being entries to recognize payment of previously recognized bad debt.