Interpreting Accounts Receivable and Its Footnote Disclosure Following is the current asset section from the W.W. Grainger, Inc., balance sheet.

As of December 31 ($ 000s)	2009	2008	2007
Cash and cash equivalents	$ 459,871	$ 396,290	$ 133,531
Accounts receivable (less allowances for doubtful accounts of $25,850, $26,481 and $25,830, respectively	624,910	589,416	602,650
Inventories, net	889,679	1,009,932	946,327
Prepaid expenses and other assets	88,364	73,359	61,666
Deferred income taxes	42,023	52,556	56,663
Prepaid income taxes	26,668	22,556	--
Total current assets	$ 2,131,515	$ 2,144,109	$ 1,800,837

Grainger reports the following footnote relating to its receivables. Allowance for Doubtful Accounts: The following table shows the activity in the allowance for doubtful accounts.

For Years ended December 31 ($ 000s)	2009	2008	2007
Allowance for doubtful accounts- accounts receivable
Balance at beginning of period	$ 26,481	$ 25,830	$ 18,801
Provision for uncollectable accounts	10,748	12,924	15,436
Write-off of uncollectible accounts, less recoveries	(12,254)	(11,501)	(8,755)
Foreign currency exchange impact	875	(772)	348
Balance at end of period	$ 25,850	$ 26,481	$ 25,830

(a) What amount do customers owe Grainger at each of the year-ends 2007 through 2009?

($ 000s)	2009	2008	2007
Gross accounts receivable	$Answer	$Answer	$Answer

(b) What percentage of its total accounts receivable does Grainger feel are uncollectible? Hint: Percentage of uncollectible accounts = Allowance for uncollectible accounts/Gross accounts receivable. Round your answers to two decimal places.

($ 000s)	2009	2008	2007
Percentage of uncollectible accounts to gross accounts receivable	Answer%	Answer%	Answer%

(c) What amount of bad debts expense did Grainger report in its income statement for each of the years 2007 through 2009?

($ 000s)	2009	2008	2007
Bad debts expense (titled Provision for Uncollectible Accounts)	$Answer	$Answer	$Answer

(d) Which of the following statements most closely describes what we observe in our answer to part (b)?

The allowance for uncollectible accounts has decreased as a percentage of gross accounts receivable in 2009. The allowance is decreasing appropriately because write-offs of uncollectible accounts are also decreasing.

The allowance for uncollectible accounts has decreased as a percentage of gross accounts receivable in 2009. The decreased percentage is caused by a decrease in the allowance, and by an increase in gross accounts receivables.

The allowance for uncollectible accounts has increased as a percentage of gross accounts receivable in 2009. The allowance is increasing appropriately because write-offs of uncollectible accounts are also increasing.

The allowance for uncollectible accounts has increased as a percentage of gross accounts receivable in 2009. This means that the allowance was too low in prior years.

(e) If Grainger had kept its 2009 allowance for uncollectible accounts at the same percentage of gross accounts receivable as it was in 2007, by what amount would its profit have changed (ignore taxes)? HINT: Use rounded answer from part b to calculate. Round answer to the nearest thousands. Profit would AnswerIncreaseDecrease by Answer($ 000s) (f) Which of the following statements about Grainger's allowance for uncollectible accounts and the related bad debts expense is false?

Since 2007, Grainger has decreased its allowance for uncollectible accounts as a percentage of gross receivables.

Grainger's current allowance account appears adequate since it is nearly three times the level of current-year write-offs.

Since 2007, Grainger's bad debt expense has decreased each year.

Since 2007 Grainger has increased its write-offs each year.