Affections manufactures candy and sells only to retailers. It is not a publicly owned company and its financial statements are not audited. But the company frequently must borrow money. Its creditors insist that the company provide them with unaudited financial statements at the end of each quarter. In October, managment met to discuss the fiscal year ending next December 31. Due to a sluggish economy, Affections was having difficulty collectin its accounts receicable, adn its cash position was unsually low. Mangment knew that id december 31 balnace sheed did not loo good, the comany would have difficulty borrowing the money it would need to boost production for Valentine's Day. Thus the purpise of the meeting was to explore way in which Affections might improve its December 31 balance sheet. Some of the ideas discused are as follows: 1- offet customers purchasing christmas candy a 10 percent discount if they make a payment within 30 days. 2 - Allow a 30-day grae period on all accounts receibable overdue at the end of the year. As these accounts will no longer be overdue, the company will not need an allowance for overdue accounts. 3-for purposes of balance sheet presentation, combine all forms of cahs including cash equivalents, compensating balances, and used lines if credit. 4- require officers who have borroed money form the company to repay the ammoints owed at December 31. This would convert into cash the"notes receivable from office"which noa apperarsin the balance sheet as non current assests. The loans could be rebewed immedidatey after the year-end. 5- present investments in marketable securitiesat their market value, rather than cost. 6- treat inventory as a financial asset asn show current sales value. 7- On december 31, draw a large check against one of the company's bank account and deposit it in another of the company's accounts in a different bank. The check wont clear the first bank until after the year- end. This will substantially increase the amount of cash in bank accounts at year-end. instructions a) separetely evaluate each of these proposals . Consider ethical issues as well as accointing issues. b) do you consider it ethical for managment to hold this meeting in the first place? that is, should management plan in advance how to improve financial statements that will be distributed to creditors and investors?