- A customer never paid the Invoice for $1,000. Wrote-off as bad debt expense account.
- Later paid $1,000.
You will first need to check to the original entry to see how the debt was written off to the bad debts expense account. For example, wrote a journal to wrote off a debt of $1,000 by debiting the bad debts expense account and crediting account receivable account.
To make this simple, you will need to reverse what you did. This will typically be a two-step process in order to record the recovery of bad debt payment.
- Reverse the original entry (Journal Entry) by crediting the bad debts expense account and debiting accounts receivable account with $1,000.
- Record the customer’s receipt by debiting the bank account and crediting accounts receivable account. In this example, debit the bank account and credit accounts receivable account with $1,000.