few years ago, Steinman persuaded the owner to base a part of her compensation
on the net income the company earns each year. Each December she estimates
year-end financial figures in anticipation of the bonus she will receive. If
the bonus is not as high as she would like, she offers several recommendations
to the accountant for the year-end adjustments. One of her favorite
recommendations is for the controller to reduce the estimate of doubtful
accounts. In 200-300 words
a. What effect does lowering the estimate for doubtful
accounts have on the income statement and balance sheet?
b. Do you think Steinman’s recommendation to adjust the
allowance for Doubtful accounts is within her right as a manager, or do you
think this action is an ethics violation? Justify your response.
c. What type of internal control (s) might be useful for
this company in overseeing the manager’s recommendations for accounting changes
