| Who would be the stakeholder?
■ ETHICS CASE
BYP9-9 The controller of Vest Co. believes that the yearly allowance for doubtful accounts for Shirt Co. should be 2% of net credit sales. The president of Vest Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which reflects a 6% growth rate, will be a more sustainable rate for Vest Co.
Instructions
(a) Who are the stakeholders in this case?
(b) Does the president’s request pose an ethical dilemma for the controller?
(c) Should the controller be concerned with Vest Co.’s growth rate in estimating the allowance?
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