Red Shoes Ltd Has Gone Bankrupt and Will Not Pay

Red Shoes Ltd has gone bankrupt and will not pay $10 000 to XYZ.XYZ has accounts receivable of $12 million and an allowance for doubtful debts of $500 000.XYZ does not adjust the accounts for the $10 000 that will not be paid by Red Shoes Ltd.Which of the following statements is true about the balance sheet of XYZ?

A) Total assets are overstated.
B) Total assets are understated.
C) Net accounts receivable is correctly stated.
D) Net accounts receivable is understated.