When aging of accounts receivable is used, each age group is multiplied by its own estimated uncollectible percentage to determine each age group's estimated uncollectible amount.The sum of the amounts thus determined

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Aging of accounts receivable is used to determine the appropriate balance of the allowance for doubtful accounts. Each age group is multiplied by its own estimated uncollectible percentage to determine the estimated uncollectible amount for that group, and the sum of those amounts is the correct balance for the allowance for doubtful accounts at year-end. It is not necessarily the bad debt expense for the year as this may also include other adjustments such as write-offs or recoveries. It is also not the amount added to the existing credit balance in the allowance account to determine the bad debt expense for the year, as this would only apply if the allowance account was underfunded. Finally, it is not the amount that should be written off as uncollectible for the year, as this will depend on the specific circumstances of each account.

When Aging of Accounts Receivable Is Used, Each Age Group