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Accounting for irrecoverable debts and allowances for receivables

Previously written off debt

subsequently received

2.1 Steps to record receipt

It is possible that debts that have previously been written off may be paid after the
debt write off.

The entries made to write off the debt as an expense must be reversed before
recording the receipt of the payment from the customer.

Step Step

1 2

Reinstate the debt Allocate payment

Debit – Receivables Debit – Bank
account account
Credit – Credit –
Irrecoverable debts Receivables
expense account account

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