Accounts receivable that are written-off should not be turned over to a collection agency.
Printed on September 29, 2022, 4:11 pm Show
Policy/Guideline AreaBusiness and Finance Guidelines Applicable DivisionsTCATs, Community Colleges, System Office PurposeThe purpose of this guideline is to establish the process regarding collection of accounts receivable at the System Office and institutions governed by the Tennessee Board of Regents. Definitions
Policy/Guideline
SourcesAuthority T.C.A. § 49-8-203; Public Chapter 739 of the Public Acts of the State of Tennessee, 2018; T.C.A. §§ 28-1-113, 4-5-301 et seq., 49-9-108; 16 C.F.R. § 314 History November 16, 1977, TBR presidents meeting. Revised July 1, 1984. Revised May 17, 1988. Revised May 12, 1992. Revised August 9, 1994, TBR presidents meeting. Revised November 9, 1994, TBR presidents meeting. Revised May 14, 1996, presidents meeting. Revised August 25, 1998, presidents meeting. Revised May 11, 1999, presidents meeting. Revised May 21, 2001 presidents meeting. Revised May 16, 2006 presidents meeting. Revised November 8, 2006 presidents meeting; Presidents Meeting August 19, 2008; Presidents Meeting November 5, 2008; Presidents Meeting, May 21, 2013; Presidents Meeting February 2, 2016; Presidents Meeting May, 2018. Related Policies
What happens to accounts receivable when an account is written off?When a specific customer's account is identified as uncollectible, the journal entry to write off the account is: A credit to Accounts Receivable (to remove the amount that will not be collected) A debit to Allowance for Doubtful Accounts (to reduce the Allowance balance that was previously established)
How do you record writeTo “write off” an account under this method we use the following journal entry: DR: Bad Debt Expense (for the amount uncollectible). CR: Accounts Receivable (for the amount uncollectible). This journal entry gets rid of the expectation that we will receive these funds and records this amount as an expense.
What happens when a receivable previously written off is collected in full?What happens when a receivable previously written off is collected in full? Reinstate the receivable and the allowance for uncollectible accounts.
How do I record a collection of previously written off accounts?To record the bad debt entry in your books, debit your Bad Debts Expense account and credit your Accounts Receivable account. To record the bad debt recovery transaction, debit your Accounts Receivable account and credit your Bad Debts Expense account. Next, record the bad debt recovery transaction as income.
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