During 2016, a company wrote off $7,500 in uncollectible accounts receivable. At the end of the year, they estimated bad debt expense using a percent of gross sales. In 2017, the company recovered a $1,500 account that was written off in 2016. The recording of this recovery would include a

Question

Quizplus · Accepted Answer

The recovery of the $1,500 account that was previously written off would result in a credit to the Allowance for Doubtful Accounts account, which represents the amount that was estimated to be uncollectible. This reduces the balance of the allowance account, which is a contra asset account, and increases the net realizable value of accounts receivable on the balance sheet. None of the other choices apply to this transaction.

During 2016, a Company Wrote Off $7,500 in Uncollectible Accounts