Question
On March 15, 2022, Red Company issued its financial statements. Its fiscal year ends at December 31, 2021. On January 11, 2022, Red issued 10,000
On March 15, 2022, Red Company issued its financial statements. Its fiscal year ends at December 31, 2021. On January 11, 2022, Red issued 10,000 20-year bonds for $20,000,000. Face value per bond equals $1,000. Stated interest rate equals 5%. On March 2, 2022, due to the unexpected economic downturn, Reds accountant re-estimated the accounts receivable to have an ending balance of $15,250,000, which was previously recorded at $16,250,000 on December 31, 2021. Please discuss how the preceding subsequent events should be reflected in the 2021 financial statements.
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