The journal entry to record the recovery of a previously written-off $2,000 account receivable (for customer Leno Company) under the allowance method would include:
A)a credit to Bad Debt Expense.
B)a credit to Cash.
C)a debit to Accounts Payable - Leno Company.
D)a credit to Allowance for Doubtful Accounts.

Question

Quizplus · Accepted Answer

When a previously written-off account receivable is recovered under the allowance method, we need to reverse the entries that were posted when the account was written off. This means that we would debit the Accounts Receivable account (to increase it) and credit the Allowance for Doubtful Accounts (to decrease it) for the amount of the recovery. Therefore, the correct choice is D, a credit to Allowance for Doubtful Accounts. Choices A, B, and C are incorrect as they are not relevant to the recovery of a previously written-off account receivable under the allowance method.

The Journal Entry to Record the Recovery of a Previously