Adjusting the allowance for doubtful receivables to its required balance

Transaction

Before adjustment, the Allowance for Doubtful Accounts has a credit balance of $1,200.00. An aging of accounts receivable shows that the allowance should have a balance of $2,100.00. Record the adjusting entry at year end.

Assumptions: The company uses the allowance method and sets the allowance from an aging schedule (percentage-of-receivables approach).