Journal Entry Bad Debts Recovered

Bad Debts Recovered 

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

Journal Entry

In the book of …………

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

Journal Entry for European Style

Journal Entries

In the book of XYZ Traders

###########

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

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