Question

Rs.1,000 received in cash from X( whose account was written off as a Bad Debt ) credited to X's Account . While rectifying this error:

• A. Cash Account to be debited and X's Account to be credited.
• B. Cash Account to be debited and Bad Debt Recovered A/c to be credited.
• C. X's Account to be debited and Bad Debt Recovered A/c to be credited.
• D. X's Account to be debited and Cash Account to be credited.

Answer 1

Answer: (C)

X's Account to be debited and Bad Debt Recovered A/c to be credited.

Amount received from debtor whose account was written of as bad debt credited to debtor's account is an error of posting. Account of debtor written off as bad debt is removed from the debtors, when such amount is received, it is credited to bad debts recovered account, because that account is no longer a part of debtors. For the rectification debtor's account is debited to cancel the entry and bad debts recovered account is credited to show the original entry.

In the case, X's account will be debited for rectification to cancel the entry passed and bad debts recovered account will be credited to record the correct entry.