X company always aim a steady net income, but the company this year had high sales resulted in extremely high net income, so the president told the controller to increase the yearly allowance for doubtful account from 4% to 6% of net credit sales because he is nervous the stockholders might expect the company to always be able to sustain such a high net income. Q/ what actions the controller should take and why ?

X company always aim a steady net income, but the company this year had high sales resulted in extremely high net income, so the president told the controller to increase the yearly allowance for doubtful account from 4% to 6% of net credit sales because he is nervous the stockholders might expect the company to always be able to sustain such a high net income. Q/ what actions the controller should take and why ?

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter22: Performance Evaluation Using Variances From Standard Costs

Section: Chapter Questions

Problem 22.2CP

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