The estimation of bad debt expense by using a percentage of credit sales produces the same results, as an aging of accounts receivable.

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The estimation of bad debt expense by using a percentage of credit sales does not account for the aging of accounts receivable, whereas an aging of accounts receivable takes into consideration the length of time that the receivables have been outstanding and assigns a higher percentage to older receivables that are considered to have a higher probability of being uncollectible.

The Estimation of Bad Debt Expense by Using a Percentage