What is Bad debts recovered | Example | Journal Entry

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  1. What is bad debt recovered?
  2. Journal entry for bad debts recovered with the golden rule.
  3. Journal entry for bad debts recovered under the modern rule.

1. What is b/debt recovered?

The b/debt recovered is that amount which was written as bad debts in a previous financial year and received in a current financial year. It is treated as income/gain of business in this year because in a previous financial year it was written as bad debt and loss/expanse was claimed.

2. Journal entry for b/debts recovered with the golden rule:

Example 1:

01/01/2018 received Rs 5,000/- written as bad debts in 2016/17.

Cash A/c -> Assets A/c – > Real Rule -> Received cash -> Debit

B/Debts recovered -> Gain A/c -> Nominal A/c -> gain  -> Credit

The journal entry for the transaction is the following:

Bad debts recovered journal entry  - What is Bad debts recovered | Example | Journal Entry
B/debts recovered journal entry

3. Journal entry for b/debts recovered under the modern rule:

Example 1:

01/01/2018 received Rs 5,000/- written as bad debts in 2016/17.

Cash A/c -> Assets A/c – > assets Rule ->increase in assets  -> Debit

B/Debts recovered -> Gain A/c -> income A/c -> increase in income -> Credit

The journal entry for the transaction is the following:

Bad debts recovered journal entry  - What is Bad debts recovered | Example | Journal Entry

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