{"id":5021,"date":"2014-08-22T05:54:58","date_gmt":"2014-08-22T03:54:58","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=5021"},"modified":"2014-08-17T05:55:36","modified_gmt":"2014-08-17T03:55:36","slug":"recognising-a-previously-written-down-receivable","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/recognising-a-previously-written-down-receivable\/","title":{"rendered":"Recognising a previously written down receivable"},"content":{"rendered":"

Say there\u2019s a situation where you consider a receivable being doubtful, you write it down and after a while your customer still pays the balance. How would you treat such a transaction in your accounting?\u00a0<\/p>\n

On one hand you\u2019ve accounted the expense for the write-down, on the other you\u2019ve added a reserve account under assets showing their real value (that is, you\u2019ve shown they may hold no value and are hence written down). However, now, as it turns out, your client paid up something you already wrote to expenses.<\/p>\n

When treating this transaction, the first recognition is ensuring that the expense is now shown as \u201cincome\u201d. That is, you\u2019d show a credit entry on the same expense account where you initially recognized the expense itself. So that\u2019s entry number one.<\/p>\n

Entry number two in such a situation is showing that you actually got money (that is showing a debit entry on cash or cash equivalent account) and with the same entry you also show that you collected a receivable. Since you didn\u2019t write off a receivable from the balance sheet, you can show something being collected.<\/p>\n\n\n\n\n\n\n\n
#<\/strong><\/td>\nDebit-Credit<\/strong><\/td>\nAccount name<\/strong><\/td>\nAmount<\/strong><\/td>\n<\/tr>\n
1<\/em><\/td>\nDebit<\/em><\/td>\nAllowance for doubtful receivables<\/em><\/td>\n500<\/em><\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\nCredit<\/em><\/td>\nReceivables write-down expense account<\/em><\/td>\n500<\/em><\/td>\n<\/tr>\n
2<\/em><\/td>\nDebit<\/em><\/td>\nCash and cash equivalents<\/em><\/td>\n500<\/em><\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\nCredit<\/em><\/td>\nAccount receivable<\/em><\/td>\n500<\/em><\/p>\n

\u00a0<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Say there\u2019s a situation where you consider a receivable being doubtful, you write it down and after a while your customer still pays the balance. How would you treat such a transaction in your accounting?\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-5021","post","type-post","status-publish","format-standard","hentry","category-1-7-basic-entries"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=5021"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5021\/revisions"}],"predecessor-version":[{"id":5022,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5021\/revisions\/5022"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=5021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=5021"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=5021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}