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Question

An amount received from Seema, whose account was previously written off as Bad Debts, should be debited to:

A Bad Debts Recovered Account Correct Answer Incorrect Answer
B Seema's Account Correct Answer Incorrect Answer
C Cash Account Correct Answer Incorrect Answer
D Bad Debts Account Correct Answer Incorrect Answer

Solution

When an amount is received from a debtor whose account was previously written off as Bad Debts, it is recorded as a recovery of bad debts. The entry would typically involve crediting the Bad Debts account to reverse the earlier write-off and debiting the Cash Account (or Bank Account) to reflect the cash received. So, the correct entry would be: Debit: Cash Account Credit: Bad Debts Recovered Account

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