Because of calamitous earthquake losses, Bernstein

Chapter 7, Problem 12

(choose chapter or problem)

Because of calamitous earthquake losses, Bernstein Company, one of your clients oldest and largest customers, suddenly and unexpectedly became bankrupt. Approximately 30% of your clients total sales have been made to Bernstein Company during each of the past several years. The amount due from Bernstein Companynone of which is collectibleequals 22% of total accounts receivable, an amount that is considerably in excess of what was determined to be an adequate provision for doubtful accounts at the close of the preceding year. How would your client record the write-off of the Bernstein Company receivable if it is using the allowance method of accounting for bad debts? Justify your suggested treatment.