Bad debts recovery

[Dwejen]

Should the GL hosting bad debts recovered be an Expense GL or and Income GL?

 

[wave]

Can you please elaborate a bit more? Bad debts that you will not recover or may recover?

 

[kirby]

If you use the Allowance for Bad Debts method then the credit goes to the allowance. If you don’t them make the credit go to a contra expense account. This is not income

 

[Dwejen]

Thanks Wave and Kirby.

I am talking of a case where my company receives an inflow of cash on account of a debt that has been already written off. Is the inflow to be treated as an income or a negative expense? ie, should the entry be recorded as a credit in a GL which is an income account or as a negative entry on the debit side of an expense account? In short if I create a GL named "Bad Debts recovered account", should I classify it as an Income GL or an Expense GL?

 

[wave]

You mentioned it was writen off so it was credited to AR already.
You need to reverse the write off entries then record collection of cash as a credit to AR.
I think this is the correct way.

reverse:

Dr. AR
Cr. Provision of BD

Record cash collection:

Dr. Bank
Cr. AR

 

[Fidget]

Thanks Wave and Kirby.

I am talking of a case where my company receives an inflow of cash on account of a debt that has been already written off. Is the inflow to be treated as an income or a negative expense? ie, should the entry be recorded as a credit in a GL which is an income account or as a negative entry on the debit side of an expense account? In short if I create a GL named "Bad Debts recovered account", should I classify it as an Income GL or an Expense GL?

As has already been said, it is not income. So you would credit whatever expense account the write off was recorded in.