PRC-1 · Chapter 8 · Question 59 of 100
A bad debt of Rs. 600 previously written off was recovered. The accountant recorded the entry by debiting Cash/Bank and wrongly credited the amount to 'Receivables'. What is the correct rectification entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Receivables Rs. 600, Credit Bad and Doubtful Debts Expense Rs. 600
Explanation
The recovery should be credited to Bad Debts Recovered (or Bad Debts Expense). The false credit to Receivables must be reversed (Debit Receivables 600) and the correct credit applied (Credit Bad Debts Expense 600).
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