Many companies use both the percentage-of-sales and the aging method to establish their allowance for doubtful accounts.

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It is common for companies to use both methods to establish their allowance for doubtful accounts. The percentage-of-sales method calculates the allowance based on a percentage of the company's total sales, while the aging method calculates the allowance based on the length of time the accounts receivable have been outstanding. Using both methods can provide a more accurate estimate of the allowance needed to cover potential bad debts.

Many Companies Use Both the Percentage-Of-Sales and the Aging Method