There is a possible situation where a debt is written off as bad in one accounting period, perhaps because the debtor has been declared bankrupt, and the money, or part of the money, due is then unexpectedly received in a subsequent accounting period.
When a debt is written off, the double entry is:
The full doube entry for the cash being received is:
and
These can be simplified to:
As the debit and crdit to the receivables account cancel each other out. However, it may be useful to pass the transaction through the customer’s account so that the fact that the debt was eventually paid, or paryly paid, is recorded there.
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