Question : 171. You have recently been hired as the assistant controller for : 1412702

171.

You have recently been hired as the assistant controller for Clayton Inc., a large, publicly held manufacturing company. Your immediate superior is the controller who, in turn, is responsible to the chief financial officer. The controller has assigned the task of preparing the year-end adjusting entry for bad debts to you. The allowance for uncollectibles accounts has a credit balance of $86,000 before the year-end adjustment. Your analysis indicates that an appropriate balance for the allowance account is $210,000. After showing your analysis to the controller, she tells you to adjust the allowance account to $310,000. Tactfully, you ask the controller for an explanation for the amount and she tells you, "We are having a really good year. Let's bump up the allowance."

Required:

Discuss the ethical dilemma you face. Consider your options and responsibilities along with the possible consequences of any action you might take.

.

172.

Briefly compare and contrast the two approaches to estimating bad debt expense. In your answer, indicate which approach, if either, is superior. 
 
 

.