1. Which of the following statements is TRUE?
   1. The journal entry to record Bad Debt Expense causes Total Assets to decrease.
   2. The journal entry to write-off an account includes a debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
   3. The journal entry to record an uncollectible accounts write-off causes Total Assets to decrease.
   4. All of the statements are true.

2. A $2,000, 120-day, 9% note was received on October 13 and the fiscal year ended on October 31. Interest will be paid by the borrower on the maturity date of the note. The adjusting entry made on October 31 to record the interest receivable is (amounts rounded to nearest dollar, use 360-day year):

1. Interest Revenue 27

Interest Receivable 27

2. Interest Receivable 9

Interest Revenue 9

3. Cash 180

Interest Receivable 180

4. Interest Receivable 60

Interest Revenue 60

3. Mars, Incorporated sells $700,000 of its products to Jewel-Osco Company. Jewel signs a promissory note that has the following terms: annual interest rate of 5% and principal plus interest due in 6 months. Assuming that Jewel repays the entire amount as scheduled after 6 months, what is the Maturity Value of Mars' note receivable?
   1. $735,000
   2. $717,500
   3. $700,000
   4. $682,500

4. The Accounts Receivable balance for Yak Corporation is $82,000 at October 31, 2020. Before calculating and recording October 2020 bad debt expense, the Allowance for Doubtful Accounts has a debit balance of $3,000. Sales for the month are $950,000. An aging of accounts receivable results in a $17,200 estimate for the Allowance for Doubtful Accounts as of October 31, 2020. In the past several years, 2% of sales have proven uncollectible.

If Yak uses the percent of sales method, Bad Debt Expense on the October 2020 Income Statement will be:

1. $16,000.
2. $17,200.
3. $19,000.
4. $20,200.