The advantage of the percentage of credit sales is that it emphasizes the matching principle, i.e. the matching of the actual credit sales with the bad debt estimate for the period. The disadvantage is that you have to know how much sales were actually made on credit, and it does not reflect the balance or age of the account which is often a good indicator of bad debt expense.

The advantage of taking the percentage of accounts receivable method is that it reflects the value of a/r based on uncollectible accounts. You can measure how much of a/r is likely to go bad, esp. based on aging of accounts receivable as illustrated here (should have included this link on the page – http://business-accounting-guides.com/allowance-for-doubtful-accounts.html
)
The disadvantage is that it does not truly match the credit sales with the bad debt expense associated with those credit sales.

Kenneth