Minquo Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2012, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible 1% 3% 6% 12% 30% Current Accounts 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Total Accounts Receivable $120,000 20,000 10,000 10,000 8,000 $168,000 Instructions (a) Prepare the adjusting entry on December 31, 2012, to recognize bad debts expense. (b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts. (c) Assume that the company has a policy of providing for bad debts at the rate of 1% of sales, that sales for 2012 were $550,000, and that Allowance for Doubtful Accounts had a $650 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.

Regarding Step4, I have some conservation..

Dr Bad Debt Expense is 5,500

Cr Allowance for doubtful Debt is 5,500

=>> the allowance is 5,500+650= 6,150

Please review the above solution and correct me if I'm not right .

Minquo Company had a $700 credit balance in Allowance for Doubtful Accounts at December  31, 2012, before the current year's provision for uncollectible accounts.

why we didnt consider $700 in our caculation?