Stacy's Service Bureau is able to collect an amount previously written off last year under the direct method.The journal entry will:

Question

Quizplus · Accepted Answer

The collection of a previously written off amount is considered a bad debt recovery and would increase the Bad Debts Recovered account. It would not affect Bad Debts Expense because that expense was already recognized last year when the account was written off. It would not affect Accounts Receivable because the account was already written off and removed from the financial statements. It would not affect Cash because the collection is a non-cash transaction.

Stacy's Service Bureau Is Able to Collect an Amount Previously