The date is February 26, 2021, and you are in the process of making adjusting entries for Bellevue Company for the year ended December 31, 2020. In your analysis of accounts receivable and bad debts, you come across the accounts for two customers that require additional attention: 

■ Kingston Pen Ltd. owed Bellevue $55,000 as at December 31, 2020. You learned that Kingston Pen filed for bankruptcy on February 14, 2021, due to continuing financial difficulties.

■ Trenton Homes owed Bellevue $79,000 as at December 31, 2020. You learned that the owners decided to cease operations on February 22, 2021. An ice dam on the Trent River caused an uninsured flooding incident that damaged most of Trenton Homes’s assets. Due to the vastly diminished assets of Trenton Homes, you expect to recover only $15,000 out of the $79,000 from the liquidation of the company’s assets.

Required:

Identify and explain the appropriate treatment of the two accounts receivable in the books of Bellevue Company. Assume the amounts are material. Comment on any similarities or differences in treatment.