Your company wrote off $350 in accounts receivable two months ago when a customer went bankrupt. That customer reorganizes and now pays the $350. Your company should:
A) debit Bad Debt Expense and credit Cash.
B) debit Accounts Receivable and credit Bad Debt Expense and then debit Allowance for Doubtful Accounts and credit Cash.
C) debit Cash and credit Bad Debt Expense.
D) debit Accounts Receivable and credit Allowance for Doubtful Accounts and then debit Cash and credit

Question

Quizplus · Accepted Answer

When a previously written-off account is collected, the company should first reinstate the account by debiting Accounts Receivable and crediting Allowance for Doubtful Accounts, then record the cash collection by debiting Cash and crediting Accounts Receivable.

Your Company Wrote Off $350 in Accounts Receivable Two Months