A written-off debt is paid after all
Money sometimes arrives for a debt that was written off. See where the receipt goes, and how a doubtful debt that pays is different.
Task 1Money for a debt that was written off4 questions
In Year 1 Calder Cycles wrote off the £600 owed by Pedal Corner. In Year 2 the liquidator pays £240 of it after all.
The debt is no longer in trade receivables, so the receipt cannot be credited there. It goes back to the expense account that the loss was charged to.
- Debit
- Bank: the money received
- Credit
- Irrecoverable debts expense: part of the old loss has been recovered
The credit reduces this year's irrecoverable debts expense. Last year's accounts are not changed.
Task 2A doubtful debt that pays4 questions