Shirt Co. is a subsidiary of Clothes Corp. The controller believes that the yearly allowance for doubtful accounts for Shirt Co. should be \(2 \%\) of net credit sales. The president of Shirt Co., nervous that the parent company might expect the subsidiary 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 Shirt Co.

\section*{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 Shirt Co.'s growth rate in estimating the allowance? Explain your answer.