The book discusses the direct charge-off (or write-off) method of recording bad debt expense. This method is easy, but is not allowed under GAAP. The book also discusses the allowance method. There are three different ways to apply the allowance method. What are they? How are each different from the direct charge-off method? What are the advantages and disadvantages of each? Why does GAAP require the use of one of these three methods over the direct charge-off method?