PRC-1 · Chapter 5 · Question 91 of 100
A business wrote off Rs. 3,000 as a bad debt, but later the same year the customer paid Rs. 1,000 of it. How is the Rs. 1,000 receipt recorded assuming the business uses a combined 'Bad and Doubtful Debts Expense' account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Bank Rs. 1,000; Credit Bad and Doubtful Debts Expense Rs. 1,000
Explanation
Because the debt was already written off, the receipt of cash bypasses the receivables ledger and is credited directly to the Bad Debt Expense account, reducing the overall expense for the year.
More Bad and Doubtful Debts MCQs
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