Instructions Below are two discussion prompts. One is labeled an Ethical Issue while the other is labeled a Communication Response. Both prompts need a response to earn full points for this extra credit. The requirements for each prompt are noted below the prompt. Ethical Issue - E-Z Loan Co. makes loans to high-risk borrowers. E-Z borrows from its bank and then lends money to people who have bad credit. The bank requires E-Z Loan to submit quarterly financial statements to keep its line of credit. E-Z's main asset is Accounts Receivable. Therefore, Bad Debts Expense and Allowance for Bad Debts are important accounts. Slade McMurphy, the controller of E-Z Loan, wants net income to increase in a smooth pattern rather than increase in some periods and decrease in others. To report smoothly increasing net income, McMurphy underestimates Bad Debts Expense in some periods. In other periods, McMurphy overestimates the expense. He reasons that over time, the income overstatements roughly offset the income understatements. Requirements: 1. Is McMurphy's practice of smoothing income ethical? This must be answered in a full grammatically correct sentence explicitly stating your decision. 2. Why or why not? You must provide at least two reasons to support your decision to the question posed in requirement #1. Additionally, your response must be at least 75 words not including repeating the prompt and using the terminology of the course. Communication Response - Explain the difference between the percent-of-sales method and the aging-of-receivables method for calculating the journal entry to adjust the Allowance for Bad Debts. Requirements: 1. Your first response must explain how each method is calculated. Your response must be at least 100 words not including repeating the prompt and using the terminology of the course. 2. In a separate paragraph, conclude your response with a summary of the major differences between the methods. Your response in this paragraph must be at least 50 words without repeating the prompt and using the terminology of the course. All writing should be in full grammatical sentences and should follow a logical thought pattern. A one-sentence response for any question will not qualify for extra credit points. All responses need to indicate that you understand each question, have given some thought to your answer, and how you intend to communicate your thoughts. A response for both the ethical issue and the communication response is required to earn full points. Your work must be readable and noted back to the requirement you are addressing.