Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, 2010, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2010, Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no Sales Returns or Sales Discounts during the year. After the adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be?

The balance in the Bad debt expense it's the amount needed to complete the total 3% estimation of the credit sales, $100,000, $3,000 it's the total amount of Allowance for Uncollectible Accounts as it has a balance of $600, at the beginning was $2,400 but the company write off $1,800, this value must be deducted of the total balance of the account:

Allowance for Uncollectible Accounts $ 1,800

Accounts Receivable $ 1,800

At the new balance of the Allowance for Uncollectible Accounts of $600 we add the new adjusting entry of $2,400, we have to total estimate balance of $3,000.

Initial Balance

Allowance for Uncollectible Accounts $ 2,400

Write Off

Allowance for Uncollectible Accounts $ 1,800

Accounts Receivable $ 1,800

New Accounts Balance

Allowance for Uncollectible Accounts $ 0,600

Adjusting Entry

Bad debt expense $ 2,400

Allowance for Uncollectible Accounts $ 2,400

Final Accounts Balance

Allowance for Uncollectible Accounts $ 3,000

Bad debt expense $ 2,400