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An advantage of basing bad debt expense on the historical relationship between bad debts and net credit sales is that it provides the best information to the credit department to use in its collection activities. it considers the balance in the allowance account when making the bad debt expense estimate. it provides the best estimate of the net realizable value of accounts receivable. oit best adheres to principle of cause and effect recognition. A disadvantage of using the gross price method to account for cash discounts extended by the seller to its customer is that the method overstates current sales and accounts receivable. the method requires more bookkeeping than the net price method. the method enables sales returns and allowances to be recorded at gross amounts. the method reports accounts receivable at the net realizable value. When accounting for uncollectible accounts, writing off a specific receivable does not reduce the current ratio if the percentage of ending accounts receivable method is in use. in current accounting practice, the most frequently used method of recognizing bad debts is the direct write-off method. an aging analysis results in reporting accounts receivable at their historical cost on the balance sheet. o if the percentage of sales method is in use, any existing balance in the Allowance for Doubtful Accounts is the amount used in the adjusting entry. Nontrade receivables, such as deposits with utility companies or advances to subsidiary companies, should be o recorded along with trade receivables in one account and included as part of the total receivables balance on the balance sheet recorded in separate accounts and reported as an offset to retained earnings on the balance sheet. o recorded in separate accounts and reported as noncurrent assets on the balance sheet. recorded in separate accounts and separately reported on the balance sheet