You are the CFO of WSG, a sporting goods company. At year-end, the CEO has asked you to determine the amount of the allowance for doubtful accounts for accounts receivable. The CEO received an accounts receivable analysis from the new credit manager. The credit manager's estimate for ending allowance for doubtful accounts is $16.3 million, which is up significantly from prior years. Their analysis is below 2009 2010 2011 2012 Sales $300,000,000 $360,000,000 $420,000,000 $370,000,000 Accounts Receivable S42,000,000 $53,000,000 $48.000.000 $67,000,000 Allowance for Doubtful Accounts $4,150,000 $5,000,000 $4,300,000 516,300,000 Allowance as a % of Receivables 9.88% 9.4396 8.96% 24.3396 The CEO has asked you to scrutinize the credit manager's analysis. Given that sales are down by 12%, the CEO feels that the allowance is too high. The CEO has also mentioned that the company's debt covenants require, amongst other things, pretax carnings of at least $10 million. If the company were to increase the allowance for doubtful accounts, the related bad debt expense would reduce pretax carnings below S10 million. You have decided to investigate the matter. You have learned that an economic recession caused sales to decline in the 4 quarter, which in turn, led the company to extend more generous credit terms to customers As CFO, what must you consider when arriving at the amount of bad debt to recognize on the financial statements? What are some of the ethical considerations you must take into account? Is it possible for a company to manipulate carnings through over or underestimating the allowance for doubtful accounts? The company has always received clean audit opinions. If you were the CFO, what amount of allowance for bad debts would you recognize on the financials? Submit your original post and response in the Group Dialogue area under Week 1 forum. You can either click on the link above to directly access the Group Page or go to the Group Dialogue link on the side menu. When you are on the Group Page, click on the group highlighted for you. Once inside, click on Discussion Board option, then click on Add Thread to create a space for your post. Click Submit to make your post available to the rest of the class. To respond to other students' threads, click on Reply button in the bottom Icft comer inside of a message. Turn thru of the discussion board postings (both your initial and participation responses) and the continuation of the class