If the Allowance for Uncollectible Accounts has a credit balance of $500 and the estimated sales for next year are $800,000, and the historical bad debt percentage has been 2%, the adjusting journal entry amount should be $15,500.

Question

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The adjusting journal entry should be $16,000, calculated as 2% of $800,000, which is $16,000. The existing credit balance of $500 in the Allowance for Uncollectible Accounts does not affect the calculation of the bad debt expense for the year.

If the Allowance for Uncollectible Accounts Has a Credit Balance