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

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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.

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