QUESTIONS You are the audit manager for a private company, Diversified Healthcare, which has a January 31 year-end. The primary user of the financial statements is the Bank of New Glasgow. While doing your follow up of accounts receivable confirmations, you are notified that a major customer, Clinical Supplies, declared bankruptcy on February 10. The amount recoverable on the debt owing to Diversified is unknown at this time, however, the total amount owed by Diversified, when combined with inventory errors found during the audit, would be a material amount. Requirement: What type of subsequent event is this? Justify your answer and state what the effect on the year-end financial statements would be. TTT Arial 3 (121) T.EE