If the estimated amount of uncollectible accounts at the end of the year (based on the aging method) was $3,675.32 and Allowance for Bad Debts had a credit balance of $860, the necessary adjustment would include

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The adjustment needed is to bring the Allowance for Bad Debts to the estimated amount of $3,675.32. Since there is already a credit balance of $860, the adjustment required is $3,675.32 - $860 = $2,815.32. Therefore, you debit Bad Debt Expense for $2,815.32 to increase the allowance to the desired balance.

If the Estimated Amount of Uncollectible Accounts at the End