4 (10%) In its first year of business, Runaway Bicycles has net income of $210,000, exclusive of any adjustment for bad debt expenses. The Chief Financial Officer (CFO) of the company has asked you to calculate net income under each of two alternatives of accounting for bad debt: The direct write- off method and the allowance method. The CFO would like to use the method that results in the higher net income. So far, no adjustments have been made to write off uncollectible accounts or to estimate bad debts. The relevant data are as follows: Write-offs of uncollectible accounts during the year Net credit sales $12,000 $3,000,000 Estimated percentage of net credit sales that will be uncollectible in future years 3% Q4.1 Compute net income under the direct write-off method. Q4.2 Compute net income under the allowance method. Q4.3 Explain what flexibility, if any, Runaway Bicycles has regarding how much earnings to report under US GAAP (no calculations required)