On January 2, 2021, WCYU learned that National Insurance, which owed the practice $200,000 at December 31, 2020, had declared bankruptcy. Unfortunately, WCYU is not expected to recuperate any of the...

On January 2, 2021, WCYU learned that National Insurance, which owed the practice $200,000 at December 31, 2020, had declared bankruptcy. Unfortunately, WCYU is not expected to recuperate any of the amount owing, given the amount of the other creditors involved in the bankruptcy. It is extremely rare for a major insurer to go bankrupt and as such WCYU had not set up an allowance for doubtful accounts in the past. Since the bankruptcy notice was not received until 2021, the 3 owners decided to write-off the whole amount in 2021. Is this correct? Explain why or why not. Include the correct computations if applicable.