Debts written off as bad are those debts which a business has deemed uncollectible and has removed them from its accounts receivable. However, it is possible that these debts may be recovered subsequently. In such a case, the recovery of bad debts is recorded as follows:

Credited to Bad Debts Recovered Account
When a bad debt is recovered, it is credited to the Bad Debts Recovered account. This account is a contra account to the Bad Debts account, which means it reduces the balance of the Bad Debts account. The Bad Debts Recovered account is a revenue account and is included in the income statement.

For example, if a business writes off a debt of $1,000 as bad, it will record a debit of $1,000 to the Bad Debts account and a credit of $1,000 to the Accounts Receivable account. If the business subsequently recovers $800 of this debt, it will credit the Bad Debts Recovered account with $800 and debit the Accounts Receivable account with $800.

Crediting the Bad Debts Recovered account ensures that the income statement reflects the recovery of bad debts as a separate item, rather than simply reducing the amount of bad debts written off.

Debited to Profit and Loss Account
If a business does not maintain a Bad Debts Recovered account, it may choose to credit the recovered amount directly to the Profit and Loss account. However, this is not recommended as it may lead to confusion and may make it difficult to analyze the performance of the business.

None of the Above
Crediting the Trade Receivables account would be incorrect as this account only reflects the amount owed by customers and does not reflect any recoveries of bad debts. Similarly, debiting the Profit and Loss account would be incorrect as this account reflects the revenue and expenses of the business and not the recovery of bad debts.

In conclusion, the correct answer is option A, which states that debts written off as bad, if recovered subsequently, are credited to the Bad Debts Recovered account.

Cash a/c. dr to bad debts recovered a/c