During 2010, a company wrote off $6, 000 in uncollectible accounts receivable.At the end of the year, they estimated bad debt expense using a percent of gross sales.In 2011, the company recovered a $1, 000 account that was written off in 2010.The recording of this recovery would include a

A) debit to Retained Earnings
B) net change to gross accounts receivable
C) credit to Allowance for Doubtful Accounts
D) credit to Prior-Period Adjustments

Question

sasheka sewell · Accepted Answer

Final Answer : C, Explanation :  The recovery of a previously written-off account represents a reduction in the amount of the uncollectible accounts expense previously recorded. To account for this recovery, the company would need to credit the Allowance for Doubtful Accounts, which had been debited previously when the account was written off. This will increase the net realizable value of accounts receivable. The other options are not relevant to this transaction.

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