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What happens when a company receives a payment on an account that has already been written off?

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User Bricky
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1 Answer

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Final answer:

When a company receives a payment on a written off account, it is considered a recovery of bad debt. The company reverses the write-off and records the payment as a recovery of bad debt.

Step-by-step explanation:

When a company receives a payment on an account that has already been written off, it means that the company had previously deemed the account as uncollectible and removed it from its books as a bad debt expense. However, getting a payment on a written off account is considered as a recovery of a bad debt. The accounting treatment for this situation involves reversing the write-off and recording the payment as a recovery of bad debt.

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User Stefan Drissen
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