The aging of accounts receivable method focuses on estimating the ending balance to be reported in the Allowance for Doubtful Accounts,whereas the percentage of credit sales method focuses on estimating Bad Debt Expense for the period.

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The percentage of credit sales method is referred to as the income statement approach,while the aging of accounts receivable method is called the balance sheet approach.While the percentage of credit sales method focuses on estimating Bad Debt Expense for the period,the aging of accounts receivable method focuses on estimating the ending balance to be reported in the Allowance for Doubtful Accounts.

The Aging of Accounts Receivable Method Focuses on Estimating the Ending