Bling Sound Inc Case
Jonathan Milley, the accountant for Bling Sound, Inc. has just completed a review of the General Ledger and is about to begin the adjusting process. His boss, Cantsing has asked to speak to him concerning an outstanding accounts receivable from GGG Studios.
Milley reviews the accounts receivable subsidiary ledger and finds no entry for a receivable from GGG Studios. A review of the customer invoices, shows that GGG Studios contracted for a composition and owes $15,000 to the company. Current reported sales are $175,000.
At the meeting, Milley explains that the receivable has not been recorded on the books and that he will correct that in an adjusting entry. Cantsing asks that Milley does not record the outstanding receivable. He explains that the head of GGG Studios has filed for bankruptcy and there is not chance of collection. Cantsing believes that including the receivable and sale on the financial statements would not be a valid representations of last year's operations.
What should Milley do?