As of December 31,2015,Gill Co.reported accounts receivable of $216,000 and an allowance for uncollectible accounts of $8,400.During 2016,accounts receivable increased by $22,000,and $7,800 of bad debts were written off.An analysis of Gill Co.'s December 31,2016,accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable.Bad debt expense for 2016 would be:

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The ending accounts receivable is $238,000 ($216,000 + $22,000). The required allowance is 3% of $238,000, which is $7,140. The allowance account started at $8,400, $7,800 was written off, so the balance before adjustment is $600 ($8,400 - $7,800). To reach the required $7,140, bad debt expense must be $6,540 ($7,140 - $600).