Question

received cash for a bad debts written off last year-5000

Answer 1

Answer: CASH A/C DR. 5000

TO BAD DEBT 5000

Explanation:

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Answer 2

Answer:

cash a/c dr 5,000

         To bad debts recover a/c.5,000

(being bad debts recover which were written off bad debts.)

Explanation:

When bad debt is written off, what does it mean?

Written off and charged off are synonyms. A loan that has been severely past due and for which the lender has given up on collecting payment is being charged off or written off.

• Debit your Accounts Receivable account and credit your Bad Debts Expense account to record the bad debt recovery transaction. The bad debt recovery transaction should then be recorded as income. Credit your Accounts Receivable account and debit your Cash account.
• When a debt is written off, it is removed from the balance sheet as an asset since the corporation does not anticipate receiving payment. In contrast, when bad debt is written off, a portion of its value is kept as an asset since the business still anticipates recovering it.

• If the amount received exceeds the amount that may be recovered, the excess will be considered income for the fiscal year in which the receipt was made.
• You must "pay off" your poor loans, though. Simply put, writing off bad debt means admitting you have suffered a loss. This contrasts with inadequate debt expenditure, a technique of accounting for potential losses in the future. It's crucial to account for bad debts while doing your bookkeeping.
• A write-off is an accounting technique that only acknowledges that a loss has happened, as opposed to a bad-debt charge that accounts for potential losses in the future.

hence entry will be

cash a/c dr 5,000

         To bad debts recover a/c.5,000

(being bad debts recover which were written off bad debts.)

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