BOOKKEEPING DOUBLE ENTRY RULES/PRINCIPLES for BAD DEBTS RECOVERED:

Whenever a debtor cannot pay, it becomes a bad debt which in reality is an expense as it is a loss for the firm.

The basic bookkeeping rules or principles is simply to debit: Bad Debts Account and Credit Debtors Account

So how do we treat the books of accounts when  a firm manages to receive money from a deliquient debtor?

Following is the BOOKKEEPING DOUBLE ENTRY RULES/PRINCIPLES for BAD DEBTS RECOVERED:

{ Remember that any bad debts recovered is a gain to the firm and should always be a credit entry.}

The journal double entry to record bad debts recovered are:

(a)    Debit:Debtors

         Credit:Bad debt recovered

[ this is to reinstate the debt previous owed by the debtor]

(b)   Debit:Bank

         Credit:Debtors

[ To record the receipt of debts from debtors]

Related posts:

1. Bookkeeping Double Entry Rules For Accounting of Fixed Assets and Depreciation
2. Difference Between Bad Debts Written Off & Provision or Allowance For Doubtful Debts
3. Accounting Test Question With Answer on Bad Debts And Accounts Receivable
4. How To Treat Increase Or Decrease In Provision Or Allowance For Doubtful Debts
5. Different Methods Of Creating Provision Or Allowance For Doubtful Debts

Tags: bad debts recovery, bookkeeping double entry, double entries principles, double entry rules, how do we, treat