Agree: Recovered Bad Debts should be credited to the debtor's account

Bad debts are those debts that cannot be collected due to various reasons such as the debtor's financial difficulties or bankruptcy. When a bad debt is written off, it means that the creditor has accepted that the debt is uncollectible and has removed it from the books. However, if the debt is recovered subsequently, it should be credited to the debtor's account.

Reasons for crediting recovered bad debts to debtor's account:

1. Ethical consideration:
Crediting recovered bad debts to the debtor's account is an ethical consideration as the debtor has paid their dues. It also helps to maintain a good relationship between the creditor and debtor.

2. Accounting principle:
According to accounting principles, a bad debt is written off when it is determined that the debt is uncollectible. If the debt is subsequently recovered, it is considered as a recovery of a bad debt and should be credited to the debtor's account.

3. Legal requirement:
In some countries, there are legal requirements that state that recovered bad debts should be credited to the debtor's account. It helps to protect the debtor's rights and ensures that they are not charged for a debt that has already been paid.

4. Fairness:
Crediting recovered bad debts to the debtor's account is fair as it ensures that the debtor is not penalized for a debt that they have already paid. It also helps to ensure that the creditor does not receive a windfall by collecting a debt that was previously written off.

5. Transparency:
Crediting recovered bad debts to the debtor's account helps to maintain transparency in the accounting process. It ensures that the books accurately reflect the financial position of the company and that all debts are accounted for.

Conclusion

In conclusion, recovered bad debts should be credited to the debtor's account for ethical, accounting, legal, fairness, and transparency reasons. It helps to maintain a good relationship between the creditor and debtor, protects the debtor's rights, ensures fairness, and maintains transparency in the accounting process.