The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the

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The existing balance in Allowance for Doubtful Accounts is a factor considered in the percentage of receivables basis for computing bad debt expense. This method takes into account the percentage of accounts receivable that are estimated to be uncollectible based on past experience and current economic conditions, and the allowance account is adjusted accordingly. In contrast, the direct write-off method does not involve the use of Allowance for Doubtful Accounts and instead writes off specific uncollectible accounts as they are identified. Therefore, the correct choice is B.

The Existing Balance in Allowance for Doubtful Accounts Is Considered