Question

received rupees 4000 from Suhas which were written off as bad debt in previous years

Answer 1

Cash A/C. Dr.  Rs.4000     To Bad Debts Recovered A/C. Rs.4000 (Being bad debts written off in last year recovered in this year)

Answer 2

Cash account debited to Bad debt recovery account

Cash A/c...Dr      4000

To Bad debt recovered A/c   4000

Explanation:

Here in this case 4000 rupees is received from Suhas, which was written off as a bad debt in the previous accounting year. Bad debts are something which occur and have a possibility of clearing itself as time goes by, customers have high chance of paying back what they owe to the company and when that happens we post an entry which reverses or which compensates the losses which were deducted in the previous accounting year due to the calculation of the bad debts which were counted in the previous year.

Here in our case it's 4000 rupees so therefore when this journal entry is passed cash will be debited as 4000 rupees are increasing. This process is called as writing off bad debts.

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