The percent of sales method for estimating bad debts assumes that a given percent of a company's credit sales for the period are uncollectible.

The percent of sales method for estimating bad debts is based on the assumption that a certain percentage of a company's credit sales will be uncollectible. This method involves multiplying the total credit sales of the period by the estimated percentage of uncollectible debt. The result is the allowance for doubtful accounts, which is an estimate of the amount of bad debt that will be incurred during the period.