The percentage of trade receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debts adjusting entry is recorded.

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The percentage of trade receivables basis of estimating uncollectible accounts takes into account the existing balance in the allowance account when the bad debts adjusting entry is recorded. This is because the existing balance represents the amount already estimated for uncollectible accounts, and the adjusting entry should reflect any additional amount that needs to be added to the allowance account.

The Percentage of Trade Receivables Basis of Estimating Uncollectible Accounts