Question - During 2015, a major customer of Kloske Company declared bankruptcy. This particular customer owed $40,000 on account to Kloske at the time of bankruptcy. In reaction to the customer's bankruptcy, Kloske wrote off the entire $40,000 of the customer's account as a loss. The president is concerned about how to report the loss on the company's income statement.
Prepare a short memo that summarizes how to report the $40,000 loss on the financial statements.