118k views
1 vote
What is the journal entry for the reinstatement of a previously written-off account?

1 Answer

3 votes

Final answer:

The journal entry for the reinstatement of a previously written-off account involves debiting accounts receivable and crediting the allowance for doubtful accounts, then debiting cash and crediting accounts receivable upon receipt of cash.

Step-by-step explanation:

When a previously written-off account is recovered, the business needs to record the reinstatement of the account. This involves reversing the write-off with a journal entry that debits the accounts receivable and credits the allowance for doubtful accounts. If any cash has been received, a second entry is made that debits cash and credits accounts receivable.

Example Journal Entry for Reinstatement of a Previously Written-off Account

Debit Accounts Receivable

Credit Allowance for Doubtful Accounts

When cash is received:

Debit Cash

Credit Accounts Receivable

By doing so, the company restores the account's value on the balance sheet and records the cash as an asset, if received.

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.