You are the Controller of ABC Manufacturng Corp, a publically traded furniture manufacturing company, based on Long Island. Business has been going well for ABC. Over the last four quarters the EPS have been 50, 54, 59, and 60 cents per share. It is nearing the end of the quarter and most of the analysts that are following your stock are projecting and EPS for the current quarter of 69 cents per share, which looks right in line with what you are projecting for the quarter. However, just as you are going over the quarter to date figures, a wholesale account that has been a long term and important customer (up to 10% of sales) to ABC has just declared Chapter 11 bankruptcy.
What course of action would you take to prepare for the next day's meeting? What additional information might you seek? What would US GAAP require you to report or discolse in your quartely 10Q? How would this be reflected in the quartlerly income statement? What EPS concerns would you expect from the CEO and President? What alternatives are avaliable to appropriately and ethically adjust earnings?