If the estimate of bad debt expense is made on the basis of net credit sales, an entry is made each period to the account, "Allowance for Doubtful Accounts," without regard to the prior balance in that account.

Question

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The estimate of bad debt expense is based on net credit sales, and the entry is made to the Allowance for Doubtful Accounts account each period without regard to the prior balance in that account. This is known as the percentage of sales method.

If the Estimate of Bad Debt Expense Is Made on the Basis