After a customer's account has been written off under the allowance method, the customer sends the company the amount owed. Before the receipt of cash can be recorded, the company must first:

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When a customer pays off a previously written-off account, the company needs to reverse the write-off entry and record the payment. The first step is to debit the Accounts Receivable account to reduce the balance that was previously written off. Then, the company can credit Cash for the amount received. There is no need to adjust the bad debt expense or allowance for uncollectible accounts accounts since the write-off already took those into consideration.

After a Customer's Account Has Been Written Off Under the Allowance