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POINTS 8 Points REQUIREMENT 1 Identify the specific effects (including account name and financial statement impact) of the following transactions or conditions on the various balance sheet components. Use (I) to indicate an increase, (D) to indicate a decrease and NE to indicate the transaction has no effect on a particular balance sheet component. Transaction Assets Liabilities Equity A convertible bond is issued at a premium. Amortization of a discount on a convertible bond at an interest date. Conversion of a convertible bond (originally issued at par) to common stock. The carrying value of the bond is greater than the par value of the common stock. Conversion of preferred stock to common stock. Assume the preferred stock was issued over par value and its net carrying value is greater than the par value of the common stock.The executive ofcers of Free State Manufacturing have a performance-based compensation plan. The performance criteria of this plan is tied to growth in earnings per share as follows: EPSGrowthRm 3212221132235\" 16% or better 125% 12-15% 100% 9-1 1 % 80% Less than 9% 0% In 20Y6, Lori Oliver, the Controller of Free State, reviews year-end estimates of bad debt expense and warranty expense. Based on those estimates and other data, she calculates the company's EPS growth at 15%. After hearing this, Kurt Edwards, a member of the executive group, suggests that the estimate of bad debt expense could be decreased, increasing the EPS growth to 16.1%, Oliver is not sure if she should do this because she believes the current estimate of bad debt expense is sound. On the other hand, she recognizes that a signicant amount of subjectivity is involved in the determining the estimate, 1. What, if any, is the ethical dilemma for Oliver? 2. Should Oliver's knowledge of the compensation plan be a factor that influences her estimate? Why or why not? 3. How should Oliver respond to Edwards