Celia Lopez is a manager of a medium-size company. A few years ago, Lopez persuaded the owner to base a part of compensation on the net income the company earns each year. Each December, she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, Lopez offers several recommendations to the accountant of the year-end adjustments. Once of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts. 1. What effect does lowering of the estimate for doubtful accounts have on the income statement and balance sheet? 2. Do you believe Lopez' recommendation to adjust the allowance for doubtful accounts is within her rights as a manager, or do you believe the action is an ethics violation? Justify your answer. 3. What type of internal control(s) might be useful for this company in overseeing the manager's recommendations for accounting changes?