Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. it is february 16, 2020, and you are auditing bloo

It is February 16, 2020, and you are auditing Bloomfield Corporations financial statements for 2019...

90.2K

Verified Solution

Question

Accounting

It is February 16, 2020, and you are auditing Bloomfield Corporations financial statements for 2019 (which will be issued in March 2020). On February 15, 2020, you read in the newspaper that Tritt, Inc., a major customer of Bloomfield, currently is in financial difficulty. Included in Bloomfields accounts receivable is $50,000 (a material amount) owed to it by Tritt. You approach Tom Bloomfield, president of Bloomfield Corporation (your client), with this information and suggest that a reduction of accounts receivable and recognition of a loss on doubtful accounts for 2019 might be appropriate. Tom replies, Why should we make an adjustment? Mary Tritt, the president of Tritt, Inc., is a friend of mine; she will find a way to pay us, one way or another. Furthermore, this occurred in 2020, so lets wait and see what happens; we can always make an adjustment later this year. Required: In your position as the external auditor of Bloomfield Corporation, prepare a memo to Ms. Smith, the audit intern on the engagement, and address the following:

1:Explain your suggested course of action in full detail.

2. Explain the proper accounting treatment and support your answer with appropriate authoritative citation.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students