The collection of an account that had been previously written off under the allowance method for uncollectible accounts
A)increases profit in the period of collection.
B)involves a credit to Bad Debt Expense.
C)will usually require two journal entries.
D)is recorded by debiting Cash and crediting Bad Debt Expense.

Question

Quizplus · Accepted Answer

When an account that was previously written off is collected, it requires two journal entries. The first entry is to reverse the previous write-off by debiting Allowance for Doubtful Accounts and crediting Accounts Receivable. The second entry is to record the actual collection, which would include debiting Cash and crediting Accounts Receivable. This does not affect the profit of the current period or involve a credit to Bad Debt Expense.

The Collection of an Account That Had Been Previously Written