The bad debt allowance reflects your expectation for the accounts receivable balance that will not be recovered. In other words, if you expect that $10,000 not be recovered, then your final bad debt allowance should be $10,000.
If the bad debt allowance that you had in the previous year was $12,000, then the entries that you will post to record the decrease in the bad debt allowance will be:
Debit Bad Debt Allowance $2,000 (Balance sheet item)
Credit Bad Debt Expense $2,000 (Income Statement Item).