The debts written off as bad, if subsequently recovered are credited to __________________.
A
Debtors
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B
Sales account
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C
Profit and loss account
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D
Bad debts account
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Solution
The correct option is C Profit and loss account A bad debt recovery is a payment received after it has been designated as uncollectible.
If the original entry was instead a credit to accounts receivable and a debit to bad debt expense (the direct write-off method), then reverse this original entry.