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 is the

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The sum of the estimated uncollectible amounts for each age group represents the required ending balance for the allowance for doubtful accounts, not the bad debt expense for the year, the increase to the existing credit balance, or the amount to be written off. This method helps in estimating how much of the receivables are unlikely to be collected.

When Aging of Accounts Receivable Is Used, Each Age Group