After selling goods on credit, if money cannot be collected from debtor firm writes off this uncollected amount as bad debt on debtor.
Sometime a debtor can return previously written-off bad debts amount; it is known as bad debt recovered.
This amount may be whole or partial.
It is credited in profit and loss account.
Bad Debts Recovered
Cash account Bank account To Bad debts recovered account (Being- previously written off bad debts now Recovered from ……………………….) |
Dr Dr
|
Cash received Cheque received Name of debtors
|
Increase in assets Increase in assets Increase in income
|
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account Bank account To Bad debts recovered account (Being- previously written off bad debts now Recovered from ……………………………….) |
Dr Dr
|
|
xxxx xxxx
|
xxxx |
PROBLEM: 19B
XYZ Traders has following extracted transactions:
Previously written off bad debts now recovered Rs 2,000.
Mr Ramesh, a debtor of Rs 25,000, became insolvent and received 35 paisa in a rupee.
M/s BG Suppliers, a debtor of Rs 60,000, became insolvent and recovered only 45% by cheque.
Required: Journal entries
SOLUTION:
Given and working note:
35 paisa in a rupee means 35% coz one rupee is 100 paisa
Cash received = 25,000 @ 35% = 8,750*
Bad debts = 25,000 @ 65% = 16,250
Cash received = 60,000 @ 45% = 27,000#
Bad debts = 60,000 @ 55% = 33,000
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
Sep, 3 |
Bad debts account Debtor received To record bad debts on debtor |
|
15,000
|
15,000
|
Journal Entry for European Style
Date |
|
|
|
€ |
€ |
Sep, 3 |
Bad debts account Debtor received To record bad debts on debtor |
Dr
|
|
15,000
|
15,000
|
Journal Entries
In the book of XYZ Traders
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account To Bad debts recovered account (Being- previously written off bad debts now recovered |
Dr |
|
2,000 |
2,000 |
|
Cash account Bad debts account To Mr Ramesh’s account (Being- debtor became insolvent and received 35 paisa in a rupee) |
Dr Dr |
|
8,750* 16,250 |
25,000 |
|
Bank account Bad debts account To M/s BG Suppliers (Being- debtor became insolvent and received 45% by cheque) |
Dr Dr |
|
27,000# 33,000 |
60,000 |
###########
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 19 BAD DEBTS RECOVERED
OP Traders has following extracted transactions:
Previously written off bad debts now recovered Rs 5,000.
Mr Mahesh, a debtor of Rs 50,000, became insolvent and received 25 paisa in a rupee.
BS Suppliers, a debtor of Rs 90,000, became insolvent and recovered only 40% by cheque.
Required: Journal entries
***********
Thank for investing your time.
Please comment on article.
You can help me by sharing this article at your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल, जय युट्युब, जय सोशल मीडिया