At the end of 2021, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (debit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2021, to record its estimated uncollectible accounts included a: Debit to Bad Debt Expense of $16,500; credit to Allowance for Uncollectible Accounts of $16,500. Credit to Bad Debt Expense of $16,500. Debit to Allowance for Uncollectible Accounts of $16,500. Credit to Allowance for Uncollectible Accounts of $12,000.

Credit to Bad Debt Expense of $16,500

Explanation:

At the end of 2021, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (debit) before any adjustment.

The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method.

Murray State's adjustment on December 31, 2021, to record its estimated uncollectible accounts included a: Credit to Bad Debt Expense of $16,500.

In this case the balance of $4,500 in the Allowance for Uncollectible Accounts is a debit rather than a credit, which implies that it has to be added to the current estimate of $12,000

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