Multiple Choice (2 points each) Use the following information about Palm Corporation to answer the next four questions. The Accounts Receivable balance for Palm Corporation is $360,000 at January 31, 2022. Before calculating and recording January 2022 bad debt expense, the Allowance for Doubtful Accounts has a debit balance of $4,000. Net sales for the month are $1,400,000. An aging of accounts receivable results in a $26,000 estimate for the Allowance for Doubtful Accounts as of January 31, 2022. In the past several years, 2% of net sales have proven uncollectible.

1. If Palm uses the percent of sales method, Bad Debt Expense on the January 2022 Income Statement will be: a. $24,000. b. $26,000. c. $28,000. d. $30,000.

2. If Palm uses the percent of sales method, the Allowance for Doubtful Accounts reflected on the January 31, 2022 Balance Sheet will be: a. $24,000. b. $26,000. c. $28,000. d. $30,000.

3. If Palm uses the analysis of receivables method, Bad Debt Expense on the January 2022 Income Statement will be: a. $24,000. b. $26,000. c. $28,000. d. $30,000.

4. If Palm uses the analysis of receivables method, the Allowance for Doubtful Accounts reflected on the January 31, 2022 Balance Sheet will be: a. $24,000. b. $26,000. c. $28,000. d. $30,000.

5. Samsung sells $10,000,000 of products to Fry's Electronics. Fry's signs a promissory note that has the following terms: annual interest rate of 6% and principal plus interest due in 8 months. Assuming that Fry's repays the entire amount as scheduled after 8 months, what is the Maturity Value of Samsung's note receivable? a. $9,600,000 b. $10,000,000 c. $10,400,000 d. $10,600,000

6. Assume that the $13,000, 60-day, 7% note was received on January 4 and that the fiscal year ended on January 31. Interest will be paid by the borrower on the maturity date of the note. The adjusting entry to record the accrued interest revenue as of January 31 would be (amounts rounded to nearest dollar, use 360-day year): a. Debit Cash 910; Credit Interest Revenue 910 b. Debit Interest Receivable 68; Credit Interest Revenue 68 c. Debit Interest Receivable 152; Credit Interest Revenue 152 d. Debit Notes Receivable 410; Credit Interest Revenue 410

7. Which of the following statements is TRUE? a. Bad Debt Expense is an operating expense. b. Allowance for Doubtful Accounts is a liability account. c. The allowance method is not approved by GAAP. d. If an account receivable was written off, it cannot be reinstated.