I did 60124 x 0.02 = 1202.48

however i see on some other examples they subract the $632 credit balace.

which way is the correct way and why?

Ava Company sets bad debt expense at 2 percent of its sales. Ava reported total sales of $ 60,124. Before the adjustment, Ava had $631 credit balance in its allowance for doubtful accounts. How much bad debt expense did Ava report on its income statement