Do you close out allowance for doubtful accounts at end of year?

Allowance for doubtful accounts is a contra-asset account, but it relates for bad-debt expense.

When increasing bad debt expense, you credit ADA and debit BDE. Allowance for doubtful accounts is just estimating how much you will need for these accounts, and bad debt expense is saying "see, i knew this would go bad" then you credit ADA.

Bad debt expense does need to be closed out though!

So...

Debit ADA

Credit Accounts receivable (This is when expenses are written off)

then

Debit BDE

Credit ADA

Bad debt expense needs to be closed out, by crediting expenses and then debiting Retained Earnings.