RWP5-6 (Static) Ethics Case You have recently been hired as the assistant controller for Stanton Industries. Your immediate superior is the controller who, in turn, reports to the vice president of finance. The controller has assigned you the task of preparing the year-end adjusting entries. For receivables, you have prepared an aging of accounts receivable and have applied historical percentages to the balances of each of the age categories. The analysis indicates that an appropriate balance for Allowance for Uncollectible Accounts is $180,000. The existing balance in the allowance account prior to any adjustment is a $20,000 credit balance. After showing your analysis to the controller, he tells you to change the aging category of a large account from over 120 days to current status and to prepare a new invoice to the customer with a revised date that agrees with the new aging category. This will change the required allowance for uncollectible accounts from $180,000 to $135,000. Tactfully, you ask the controller for an explanation for the change and he tells you, "We need the extra income: the bottom line is too low Required: 1. Understand the reporting effect: What is the effect on income before taxes of lowering the allowance estimate from $180,000 to $135,000, as requested by the controller? 2. Specify the options: If you do not make the change, how would the additional $45,000 of Allowance for Uncollectible Accounts affect total assets? 3. Are Investors and creditors potentially harmed by the controller's suggestion? 4. Should you follow the controller's suggestion? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 1 33 ts Skipped Required: 1. Understand the reporting effect: What is the effect on income before taxes of lowering the allowance estimate from $180,000 to $135,000, as requested by the controller? 2. Specify the options: If you do not make the change, how would the additional $45,000 of Allowance for Uncollectible Accounts affect total assets? 3. Are investors and creditors potentially harmed by the controller's suggestion? 4. Should you follow the controller's suggestion? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Understand the reporting effect: What is the effect on income before taxes of lowering the allowance estimate from $180,000 to $135,000, as requested by the controller? Income before taxes Required Required 2 > 1. Understand the reporting effect: What is the effect on income before taxes of lowering the allowance estimate from $180,000 to $135,000, as requested by the controller? 2. Specify the options: If you do not make the change, how would the additional $45,000 of Allowance for Uncollectible Accounts affect total assets? 3. Are investors and creditors potentially harmed by the controller's suggestion? 4. Should you follow the controller's suggestion? pped Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Specify the options: If you do not make the change, how would the additional $45,000 of Allowance for Uncollectible Accounts affect total assets? Total assets 33 skipped 1. Understand the reporting effect: What is the effect on income before taxes of lowering the allowance estimate from $180,000 to $135,000, as requested by the controller? 2. Specify the options: If you do not make the change, how would the additional $45,000 of Allowance for Uncollectible Accounts affect total assets? 3. Are investors and creditors potentially harmed by the controller's suggestion? 4. Should you follow the controller's suggestion? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Are investors and creditors potentially harmed by the controller's suggestion? derwily the impact Are investics and creditors potentially harmed by the controller's suggestion? 1. Understand the reporting effect: What is the effect on income before taxes of lowering the allowance estimate from $180,000 to $135,000, as requested by the controller? 2. Specify the options: If you do not make the change, how would the additional $45,000 of Allowance for Uncollectible Accounts affect total assets? 3. Are investors and creditors potentially harmed by the controller's suggestion? 4. Should you follow the controller's suggestion? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should you follow the controller's suggestion? Make a decision: Should you follow the controller's suggestion?