What is the policy regarding bad debts on revenue recognition?

Group of answer choices

Companies should not do business with customers that will cause bad debt.

Bad debts are ignored when determining whether to recognize revenue, but recognized as an expense on the income statement.

The seller must believe it is probable it will collect the amounts it is entitled to collect.

Bad debts are deducted from revenue to calculate net revenue on the income statement, similar to sales returns.

Bad debts must be of $50\%$ or less likelihood in order to recognize revenue.