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.