"The justification for the usage of the allowance method as contrasted with the direct write-off method of accounting for bad debts is that under the allowance method the bad debt is deducted from the allowance account" To add , under the allowance method, the company must estimate the Bad Debts, expense . There are several ways to estimate Bad Debts expense.

QUESTION FOR YOU

Which method do you feel will provide a more accurate result of the estimate for bad debts expense