Credit entry for Rs 5000 received from Mohan whose account was written off as bad in the previous year

In accounting, when a debt is written off as bad, it means that it is considered unlikely to be recovered. However, if any payment is received from the debtor after the debt has been written off, the accounting treatment for such payment is as follows:

1. Reversal of write-off entry
The write-off entry made in the previous year must be reversed. This is because the payment received indicates that the debt is no longer irrecoverable. The reversal entry should be made to the same accounts that were debited and credited when the write-off entry was made.

2. Credit entry for payment received
The payment received should be credited to the debtor's account as it reduces the amount owed by the debtor.

3. Debit entry for cash received
The cash received should be debited to the bank account or cash account as applicable.

Therefore, in this case, the accounting treatment for Rs 5000 received from Mohan whose account was written off as bad in the previous year would be as follows:

- Reverse the write-off entry made in the previous year by debiting the debtor's account and crediting the bad debt account.
- Credit Rs 5000 to Mohan's account as it reduces the amount owed by him.
- Debit Rs 5000 to the bank account or cash account as applicable.

Overall, it is important to properly account for any payment received from a debtor whose account was written off as bad as it can impact the financial statements and tax liabilities.

Bad debt recovered a/c