Toughbuilt Industries, Inc., designs, manufactures, and distributes tools and accessories to the do-it-yourself and professional building industry.

Required:
1. Access EDGAR on the Internet. The web address is www.sec.gov.
2. Search for Toughbuilt Industries, Inc. Access the 10-K filing for the year ended December 31, 2019. Search or scroll to find the financial statements.
3. Read the discussion of Accounts Receivable in Note 2, and answer the following questions:
a. What is the balance in Toughbuilt’s allowance for doubtful accounts as of December 31, 2019 and 2018?
b. Compare the size of the allowance for doubtful accounts to the amount Toughbuilt lists as Accounts Receivable, Net in its Balance Sheet. Is the balance in Toughbuilt’s allowance for doubtful accounts surprising to you? Why or why not?

c. What approach for accounting for bad debts would be consistent with the balance in the allowance for doubtful accounts that you observe for Toughbuilt? Is that approach consistent with GAAP? If not, how might Toughbuilt justify using it?
4. Read the discussion of Sales Returns and Allowances in Note 10, and answer the following questions:
a. What is the balance in Toughbuilt’s reserve for sales returns and allowances as of December 31, 2019, and 2018?
b. Compare the change in the reserve for sales returns and allowances to the change in Toughbuilt’s Accounts Receivable, Net in its Balance Sheet. Is that comparison of concern to you? Why or why not?
5. Read the discussion of Toughbuilt’s factoring arrangement under Accounts Receivable in Note 2 and in Note 3, and answer the following questions:
a. Does Toughbuilt account for its factoring arrangement as a secured borrowing or a sale of receivables?
b. Is the factoring arrangement with recourse or without recourse.
c. What is the amount of loan payable to the factor as of December 31, 2019, and where is that amount listed in Toughbuilt’s balance sheet?