Answer to Question #164901 in Accounting for Milan

Question

Debit Accounts Receivable

Credit Allowance for Uncollectible Accounts 

• What does this journal entry mean?

Debit Cash

Credit Uncollectible Accounts Recovered (Revenue) 

• What does this journal entry mean?

Is Allowance for Doubtful Accounts the same as Allowance for Uncollectible Accounts? If not, what is the difference?

Answer 1

Solution:

1.). This journal entry means that a previously written off account is re-established by reversal of the entry recorded at the time of the write-off.

This is because the business or account whose payment had been written off paid back the amount at a later date, which means that you need to reverse the write-off you made.

 

2.). This journal entry means that the recovery of bad debt has been recovered and recorded.

A debtor whose account had previously been written off as an uncollectable account or bad debt has decided to make a payment, which is called the recovery of uncollectable accounts or bad debts. This amount is treated as a gain to the business.

 

3.). Allowance for Doubtful Accounts is the same as Allowance for Uncollectible Accounts. Allowance for uncollectible accounts is a contra asset account on the balance sheet representing accounts receivable the company does not expect to collect. Allowance for uncollectible accounts is also known as an allowance for doubtful accounts and maybe expensed as bad debt expense or uncollectible accounts expense.