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An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry?
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An amount of Rs.2,000 due from Mahesh Chand which had been written off...
Suspense a/c dr 4000
to baddebts a/c 2000
to personal a/c 2000
to baddebts a/c 2000
to personal a/c 2000
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An amount of Rs.2,000 due from Mahesh Chand which had been written off...
Rectification of Journal Entry for Recovery of Bad Debt
Background:
An amount of Rs.2,000 due from Mahesh Chand, which had been written off as a bad debt in the previous year, was unexpectedly recovered.
Error:
The amount was posted to the personal A/c of Mahesh Chand, which is not correct.
Rectification:
1. Identify the error: The error in the journal entry is that the amount of Rs.2,000 was posted to the personal A/c of Mahesh Chand.
2. Reverse the incorrect entry: To rectify the error, the incorrect entry needs to be reversed. The journal entry for this would be as follows:
Bad Debt A/c Dr. 2000
To Mahesh Chand A/c 2000
3. Make the correct entry: The correct entry for the recovery of bad debt is as follows:
Cash A/c Dr. 2000
To Bad Debt A/c 2000
4. Explanation: When a bad debt is written off, it is debited to the Bad Debt A/c and credited to the respective debtor's personal A/c. However, when the bad debt is recovered, the cash account is debited, and the bad debt account is credited. This is because the cash account represents the actual cash received, and the bad debt account represents the amount written off previously.
Conclusion:
To rectify the error, the incorrect entry needs to be reversed, and the correct entry needs to be made. By doing so, the accounting records would be accurate and reflect the recovery of bad debt correctly.
Background:
An amount of Rs.2,000 due from Mahesh Chand, which had been written off as a bad debt in the previous year, was unexpectedly recovered.
Error:
The amount was posted to the personal A/c of Mahesh Chand, which is not correct.
Rectification:
1. Identify the error: The error in the journal entry is that the amount of Rs.2,000 was posted to the personal A/c of Mahesh Chand.
2. Reverse the incorrect entry: To rectify the error, the incorrect entry needs to be reversed. The journal entry for this would be as follows:
Bad Debt A/c Dr. 2000
To Mahesh Chand A/c 2000
3. Make the correct entry: The correct entry for the recovery of bad debt is as follows:
Cash A/c Dr. 2000
To Bad Debt A/c 2000
4. Explanation: When a bad debt is written off, it is debited to the Bad Debt A/c and credited to the respective debtor's personal A/c. However, when the bad debt is recovered, the cash account is debited, and the bad debt account is credited. This is because the cash account represents the actual cash received, and the bad debt account represents the amount written off previously.
Conclusion:
To rectify the error, the incorrect entry needs to be reversed, and the correct entry needs to be made. By doing so, the accounting records would be accurate and reflect the recovery of bad debt correctly.
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An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry?
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An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry?.
An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An amount of Rs.2,000 due from Mahesh Chand which had been written off as a bad debt in previous year was unexpectedly recovered has been posted to the personal A/c of Mahesh Chand. Rectify journal entry?.
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