Percent of Sales Approach Example: Music Land has credit sales of $400,000 and estimates 0.6% of those sales will not be collectible. Estimated Bad Debts Expense is calculated as $2,400 ($400,000 x.6%). QS 85 Adjusting entry to estimate bad debts-percentage of sales Lexton Company uses the allowance method to account for uncollectible accounts receivable. At year-end, October 31, it was estimated that 0.6% of net credit sales were uncollectible based on past experience. Net sales were $690,000, of which 273 were on credit. Record the entry at year end to estimate uncollectible receivables