Lily Pao, a friend of yours, overheard a discussion at work about changes her employer wants to make in accounting for uncollectible accounts. Lily knows little about accounting, and she asks you to help make sense of what she heard. Specifically, she asks you to explain the differences between the percentage-of-sales, percentage-of-receivables, and the direct write-off methods for uncollectible accounts.

Instructions In a letter of one page (or less), explain to Lily the three methods of accounting for uncollectibles.

Be sure to discuss differences among these methods.

Ethics Case