The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz. co. should be 2% of net credit sales. The presdident of Ruiz 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 refects a 6% growth rate, will be a more sustainable rate for Ruiz Co.

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