Recovery of Uncollectible Accounts Under Allowance Method / Approach

If the uncollectible accounts which was previously written off, but now customer again is ready to sent payment to company then two Accounting Journal Entries are passed by the company.

1. For Creating Uncollectibele Accounts Again: In this step, as the customer is willing to pay, then he again becomes the customer of the company and company pass the following journal entry for Estimating Bad Debts Expense (it is the reversal of the previous entry of Writing Off Uncollectible Accounts):

You Can Also Read Out, “Bad Debt Recovered Account”

                           Accounts Receivable a/c   XXX

                                                                Allowance for Doubtful Accounts a/c   XXX

(Allowance for Bad Debts Now Created)

When the customer actually makes payment to company, then following entry is passed as for Accounts Receivable Collections or Cash Receipts from Customer:

                                                              Cash a/c    XXX

                                                                           Accounts Receivable a/c   XXX

(Cash Received From Customers)