Oxhaven Company has determined that 2% of $50,000 credit sales are uncollectible.The Allowance for Uncollectible Accounts currently has a credit balance of $250.The adjusting entry amount for bad debts should be $1,000.

Question

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The current balance in the Allowance for Uncollectible Accounts is $250, but based on the information provided, the company expects $1,000 in bad debts (2% of $50,000). Therefore, an adjusting entry of $750 ($1,000 - $250) is needed to bring the balance of the Allowance for Uncollectible Accounts up to the expected amount of bad debts.

Oxhaven Company Has Determined That 2% of $50,000 Credit Sales