Bad Debt Recovered Account

It may possible that the amount of Bad Debts Written off (Actual Bad Debts) recovered from our old customer (Accounts Receivable / Debtor) who initially failed to pay the amount of unpaid dues in time. Such a recovery of debts amount from customer is called Bad Debt Recovery and the company makes an account with the name of Bad Debt Recovered Account in which such type of Business Transaction is recorded.

You Can Also Read Out, “Difference Between Uncollectible Accounts Expense VS Bad Debts Expense”

A company adopting either Allowance Method or Direct Write-Off Method, the adjusting entry for Bad Debt Recover is the same.

Example of Recovery of Bad Debts Previously Written Off

UFor Example, if one of our customer (Mr. A) initially failed to pay unpaid dues on time for the goods sold Rs. 30000, but after some time, i.e., 2 years he / she is able to pay the amount, then the recovery of bad debt is recorded in the book or journal of company as shown below:

 Bad Debt Recovery Accounting Journal Entry

                                                         Cash a/c  300000

 

                                                                        Bad Debts Recovered a/c  300000

(Old Unpaid Amount Received From Mr. A For Bad Debts Written Off)

As Bad Debts Recovered Account is a Revenue / Income for the company, so it is recorded in the Income Statement / Profit And Loss Account.