Problem:
Holtzman Corporation had a 1/1/07 balance in the allowance for doubtful accounts of $10,000. During 2007, it wrote off $7,200 of accounts and collected $2100 on accounts previously written off. The balance in accounts receivable was $200,000 at 1/1 and $240,000at 12/31. At 12/31/2007, Holtzman estimates that 5% of accounts receivable will prove to be uncollectible. What is bad debt expense for 2007?