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 Debts Expense.
C)will usually require two journal entries.
D)is recorded by debiting Cash and crediting Bad Debts Expense.

Question

Quizplus · Accepted Answer

When an account that was previously written off is collected, it requires two journal entries: the first entry reverses the write-off entry by debiting Accounts Receivable and crediting Allowance for Doubtful Accounts, while the second entry records the collection of cash by debiting Cash and crediting Accounts Receivable. There is no effect on profit, and no credit to Bad Debts Expense is required.

The Collection of an Account That Had Been Previously Written