You Have Recently Been Hired as the Assistant Controller for Clayton

question 8

Essay

You have recently been hired as the assistant controller for Clayton, Inc., a large, publicly-held manufacturing company. Your immediate superior is the controller who, in turn, is responsible to the chief financial officer. The controller has assigned you the task of preparing the year-end adjusting entry for bad debts. The allowance for uncollectibles accounts has a credit balance of $86,000 before the year-end adjustment. Your analysis indicates that an appropriate balance for the allowance account is $210,000. After showing your analysis to the controller, she tells you to adjust the allowance account to $310,000. Tactfully, you ask the controller for an explanation for the amount and she tells you "We are having a really good year. Let's bump up the allowance."
Required:
Discuss the ethical dilemma you face. Consider your options and responsibilities along with the possible consequences of any action you might take.

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Definitions:

Hypertension

A chronic medical condition in which the blood pressure in the arteries is persistently elevated.

SSRI Medications

Drugs categorized as selective serotonin reuptake inhibitors, used primarily to treat depression and anxiety by increasing serotonin levels in the brain.

Synaptic Gap

The small space between two neurons, across which neurotransmitters move to transmit impulses.

Serotonin

A neurotransmitter involved in many processes in the body including mood regulation, digestion, and sleep.