When collecting a previously written-off account
A)Cash is debited and Bad Debts Expense is credited.
B)Accounts Receivable is debited and Sales is credited.
C)Accounts Receivable is debited and credited.
D)Accounts Receivable is not affected.

Question

Quizplus · Accepted Answer

When collecting a previously written-off account, the correct accounting treatment is to reverse the write-off by debiting Accounts Receivable and crediting the Allowance for Doubtful Accounts (not explicitly mentioned in the options but implied in option C). This restores the account receivable that had been previously removed. The actual collection of cash would then be recorded by debiting Cash and crediting Accounts Receivable in a separate transaction.

When Collecting a Previously Written-Off Account