All 23 Collections & Bad Debts questions
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Accounts Payable & Receivable › Collections & Bad Debts

How do you record the recovery of a previously written-off account?

Intermediate

Answer

If a written-off customer later pays, reverse the write-off to reinstate the receivable (debit AR, credit allowance), then record the cash receipt normally (debit cash, credit AR). This restores the audit trail and correctly shows the recovery, rather than crediting income directly.
Recovery of a $1,500 written-off account:
  1) Dr AR 1,500  Cr Allowance 1,500  (reinstate)
  2) Dr Bank 1,500  Cr AR 1,500       (collect)
Real-world example A customer written off last year unexpectedly pays; AR reinstates and then clears the account in two steps.

Common follow-ups: Why reinstate before recording cash? | Where does the recovery ultimately land?

Cash Application Reconciliations Collections & Bad Debts
All 23 Collections & Bad Debts questions