Power Plumbing provides routine plumbing services to corporate clients. Clients are expected to pay on the first day of each month, in advance of receiving services. Preppy Academy has been a longtime client of Power Plumbings. Preppy Academy has not paid since September 2022. However, to maintain a positive customer relationship, Power Plumbing continued to provide services to Preppy Academy. Power Pluming finally ceased providing services in January 2023 and found out in the same month that Preppy Academy filed for bankruptcy in August 2022. Power Plumbing believes that collection of the missed payment is extremely unlikely.

Power Plumbing has already issued its financial statements for the year ended December 31, 2022 that reflected revenue and a corresponding account receivable related to Preppy Academy of $11,000 per month for services provided. The financial statements also reflected the companys standard allowance for doubtful accounts of 3% of sales revenue. Power Plumbings average monthly sales revenue amounts to $300,000.

Identify research questions for Power Plumbing. Identify two alternative treatments related to Preppy Academys bankruptcy. Determine which treatment is more appropriate given the circumstances. Support your answer with the relevant FASB ASC references.