Material accounts receivable from customer

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Reference no: EM13789081

Long and Short, CPAs, were auditing Island Corporation for the year ended December 31, 2014. On January 11, 2015, a major customer of Island Corporation declared bankruptcy as the result of an uninsured loss due to a major fire in their warehouse on January 8, 2015. As a result, a material accounts receivable from the customer was determined to be uncollectible. Long and Short, CPAs, would expect the client to

A. treat the loss as a subsequent event and adjust the 2014 financial statements to record the loss on uncollectible accounts.

B. record the loss on uncollectible accounts as a routine transaction in the year 2015.

C. treat the loss as a subsequent event and provide a footnote about the loss in the 2014 financial statements.

D. file a lawsuit against the customer in hopes of collecting some of the money owed to the client.

Reference no: EM13789081

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