Your company wrote off $350 in accounts receivable two months ago when a customer went bankrupt.That customer reorganizes and now pays the $350.Your company should:
A)debit Bad Debt Expense and credit Cash.
B)debit Accounts Receivable and credit Bad Debt Expense and then debit Allowance for Doubtful Accounts and credit Cash.
C)debit Cash and credit Bad Debt Expense.
D)debit Accounts Receivable and credit Allowance for Doubtful Accounts and then debit Cash and credit Accounts Receivable.

Question

Quizplus · Accepted Answer

When the company wrote off the accounts receivable two months ago, it would have debited Allowance for Doubtful Accounts and credited Accounts Receivable. 
Now that the bankrupt customer has paid, the company needs to reverse the write-off by debiting Accounts Receivable and crediting Allowance for Doubtful Accounts. 
To record the actual receipt of the payment, the company should debit Cash and credit Accounts Receivable.

Your Company Wrote Off $350 in Accounts Receivable Two Months