The Allowance for Bad Debts can be calculated as a specific percentage of credit sales and is a contra account to Accounts Receivable.

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The Allowance for Bad Debts is indeed calculated as a percentage of credit sales and is used to reduce the Accounts Receivable balance to its estimated net realizable value, which reflects the amount of expected cash receipts. As a contra account, it is subtracted from Accounts Receivable on the balance sheet.

The Allowance for Bad Debts Can Be Calculated as a Specific