Assume that you are preparing Galore Ltd's yearly allowance for doubtful debts based on 2% of net credit sales, which will potentially result in 10% growth rate. The managing director, Ms Sharon Shady (Sharon), suggested you to increase the allowance for doubtful debts to 4% in order to achieve a 5% growth rate. Sharon said to you that: \"we do not want our shareholders to expect our company to sustain a 10% growth every year rather, a 5% growth rate is more sustainable for our company.\"<\/p>
<\/p>
1). What are the relevant factors that should be considered when estimating yearly allowance for doubtful debts? <\/p>
2). How does the allowance for doubtful debts potentially impact Galore Ltd's financial reports?<\/p>", "transcribed_text": "", "related_book": { "title": "The Changing Geography Of Banking And Finance", "isbn": "1441947205, 978-1441947208", "edition": "1st Edition", "authors": "Pietro Alessandrini ,Michele Fratianni ,Alberto Zazzaro", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2024\/03\/66050c9f889e3_94366050c9f62f22.jpg", "uri": "\/textbooks\/the-changing-geography-of-banking-and-finance-1st-edition-978-1441947208-260622", "see_more_uri": "" }, "free_related_book": { "isbn": "1451675763", "uri": "\/textbooks\/big-science-ernest-lawrence-and-the-invention-that-launched-the-military-industrial-complex-1st-edition-978-1451675764-369627", "name": "Big Science Ernest Lawrence And The Invention That Launched The Military Industrial Complex", "edition": "1st Edition" }, "question_posted": "2024-06-06 20:13:39", "see_more_questions_link": "\/study-help\/questions\/business-banking-2021-September-12", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/consider-the-following-comparative-income-statement-and-additional-balance-sheet", "description": "Consider the following comparative income statement and additional balance sheet data for Iconic Fashions, Inc. 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