BYP9-6. The controller of Ruiz Co. believes that the yearly allowance for doubtf
ID: 2444057 • Letter: B
Question
BYP9-6.The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz Co. should be 2% of net credit sales. The president 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 reflects a 6% growth rate, will be a more sustainable rate for Ruiz 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 Ruiz Co.'s growth rate? Explain your answer.
Explanation / Answer
Who are the stakeholders in this case?
Stockholders are the stakeholders in this case
Does the president's request pose an ethical dilemma for the controller?
Yes President Request to pose an ethical dilemma
Should the controller be concerned with Ruiz Co.'s growth rate?
As the company is showing 10% growth till now so the stock holders expecting the same. But this time controller have some strategies so that he is increasing doubtful debts 2% to 4% so the growth rate also decreases so keeping all this factors in mind he is concerned with Ruiz Co.'s growth rate
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