As of December 31, 2017, Gill Co. reported accounts receivable of $216,000 and an allowance for uncollectible accounts of $8,400. During 2018, accounts receivable increased by $22,000 (that change includes $7,800 of bad debts that were written off). An analysis of Gill Co.'s December 31, 2018, accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. Bad debt expense for 2018 would be:

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$\begin{array}{lr}
\text {Step 1 }&\
\text {A/R 12/31/2017 }&\$ 216,000\
\text {Increase }&22,000\\text { A/R 12/31/2018 }&\$2385,000\&\times 3\%\\text { Uncollectible }&\$7,140
\end{array}$
 $\begin{array}{l}
\text { Step 2 } \
\text { Allowance } 12 / 31 / 2017& \$8,400 \
\text { Write-offs }&(7,800)\\text { Allowance }&\$600
\end{array}$ Step 3
$7,140 - 600 = $6,540 expense