Assume that you are preparing Galore Ltd’s yearly allowance for doubtful debts based on 2% of net…

Assignment Questions:
Assume that you are preparing Galore Ltd’s yearly allowance for doubtful debts based on 2%
of net credit sales, which will potentially result in 10% growth rate. The managing director, Ms
Sharon Shady (Sharon), suggested you to increase the allowance for doubtful debts to 4% in
order to achieve a 5% growth rate. Sharon said to you that: “we do not want our shareholders
to expect our company to sustain a 10% growth every year rather, a 5% growth rate is more
sustainable for our company.”
You are required to conduct research (i. e. reviewing relevant accounting standards and policies
as well as academic and professional journals) and write a business report by addressing the
below questions.