Recovering Written-off Accounts
If an account receivable that was previously written-off is collected, this is called a recovery and must be recorded using two journal entries.
Recovering an Account
- Collection of an account that was previously written-off.
- Two journal entries:
- First entry is to undo the write-off and reinstate the account (Debit Accounts receivable and Credit Allowance for doubtful accounts).
- Second entry is to record the collection (Debit Cash and Credit Accounts receivable)
Example: Recovering Written-off Accounts
Prepare the journal entries to record the following transaction.
On September 13th, ABC Inc. received a payment of $2,000 from a customer whose account had been previously written off.
