CIMA BA3 Syllabus C. PREPARATION OF ACCOUNTS FOR SINGLE ENTITIES - An irrecoverable debt recovered - Notes ^{10 / 20}

An irrecoverable debt which has been written off might occasionally be unexpectedly paid.

If it is paid in the same accounting period, the write-off journal can simply be reversed.

The only accounting problem to consider is when a debt written off as irrecoverable in one accounting period is subsequently paid in a later accounting period.

In this case, the amount paid should be recorded as additional income in the statement of profit or loss of the period in which the payment is received.

Accounting Treatment

Dr Cash
Cr Trade Receivables

Dr Trade Receivables
Cr Bad debts recovered (I/S)