The of credit sales is the method that estimates bad debt expense using credit sales and the of accounts receivable method estimates the allowance for doubtful accounts based on the time each account receivable has been outstanding.

Percentage

Explanation:

The percentage of credit sales method is one of the methods used in estimating bad debt expenses. The other method is the account receivable method. The percentage of credit sales method is also known as the income statement approach. It is dine by checking the historical percentages of credit sales that resulted in the bad debt. Attention is drawn towards determining the amount to be recorded on income statement as bad debt expense. Bad debt in itself refers to temporary account that states the estimated amount of current period's credit sales that customers will fail to pay.

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