Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 30 - No. 35)
Which of the following is the correct order of steps to account for a previously written-off debt that is subsequently recovered, using the allowance method?
Debit Cash, Credit Bad Debt Expense; Debit Accounts Receivable, Credit Allowance for Doubtful Accounts.
Debit Cash, Credit Accounts Receivable; Debit Accounts Receivable, Credit Allowance for Doubtful Accounts.
Debit Accounts Receivable, Credit Allowance for Doubtful Accounts; Debit Cash, Credit Accounts Receivable.
Debit Cash, Credit Accounts Receivable.
Explanation
First, the debt is reinstated, and then the cash is recorded.
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