ICAEW AF · Chapter 10 · Question 2 of 9
A customer whose debt of £540 was written off as irrecoverable in a previous year unexpectedly pays the £540 in full. What double entry records the receipt, assuming the debt is not reinstated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Debit Cash £540, Credit Irrecoverable debts expense £540
Explanation
The debt was removed from receivables when it was written off, so there is no receivable to credit. The cash received is debited to the bank account, and the credit is made to the irrecoverable debts expense account, reducing the charge (or creating income) in the current year.
More Irrecoverable debts and allowances for receivables MCQs
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