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in this video were going to talk about the aging method for accounts receivable thats used when you want to estimate bad debt so the easiest way to come up with a bad debt expense is basically just the percentage of sales method you just look at the sales and you say okay three percent is uncollectible and then youve got your journal entry the aging method focuses on the different types of accounts receivable specifically you can set out an actual schedule called an aging schedule you set up and say okay got the age and lets say that the receivable has only been due for less than 60 days so you say under 60 days and then youve got receivables that have been due between 60 and 120 days and then youve got receivables that have been due over 120 days so those ones spend several several months nobodys paid you yet for these and so you might see immediately where youd be less likely to collect these you think hey look its been more than four months so you might have a higher rate
