Under the allowance method, when a receivable that had been previously written off is collected:

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Under the allowance method, when a previously written-off receivable is collected, it reverses the write-off entry and recognizes the cash collection. This does not affect profit or net assets because the write-off and collection are adjustments within the allowance for doubtful accounts, which is already accounted for in prior periods.

Under the Allowance Method, When a Receivable That Had Been