Your Client's Balance Sheet Date Is 30 June 2012, the Audit

Essay

Your client's balance sheet date is 30 June 2012, the audit report date is 31 August 2012, and the financial statements are issued 15 September 2012.A customer with a material outstanding accounts receivable balance declared bankruptcy on 5 July 2012 due to a warehouse fire that occurred 27 June 2012.State whether this situation warrants an adjustment to the financial statements, requires disclosure in footnotes but not an adjustment, or needs no action.Justify your answer.