A. When the maker of a note defaults:

1.An account receivable is recorded for the principal amount of the note only.2.An account receivable is recorded in the amount of the principal plus interest through the maturity date.3.Any interest earned for the current period is not recorded, since the maker has defaulted.4.Any interest earned in a previous period that has already been recorded as interest receivable is written off as a loss due to the maker's default.

B. Each of the following transactions would be reflected in both the income statement and the statement of cash flows for the current period, except: 1.The adjustment of marketable securities to their current market value. 2.Receipt of dividends earned on investments. 3.Payment of interest on bonds. 4.Sale of merchandise for cash.