Question :

Bling Sound, Inc. Case

Jonathan Milley, the accountant for Bling Sound, Inc. has just finished a review of the General Ledger and is about to start 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 locate 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. Existing reported sales are $175,000.

At the meeting, Milley describes that the receivable has not been recorded on the books and that he may correct that in an adjusting entry. Cantsing asks that Milley does not record the outstanding receivable. He describers that the head of GGG Studios has filed for bankruptcy and there is no chance of collection. Canting believes that adding the receivable and sale on the financial statements would not be valid representations of last year's operations.

What should Milley do?