account receivable previously written off as uncollectible is now collected. The entry is to reverse the original write-off by debiting accounts receivable and crediting allowance for bad debts. A second entry is required for the collection by debiting cash and crediting accounts receivable. A high ratio of recoveries to write-offs may signify to the analyst that the firm writes off uncollected debts too quickly.
collection of loans written off as uncollectible and charged to the lender’s loan loss reserves account. Recoveries may come from several sources: the borrower’s voluntary payment of some or all of the principal or interest payments due; foreclosure and sale of the borrower’s assets pledged as loan collateral; or garnishment of the borrower’s wages, salary, or bank assets.