The Dotson Company, owner of Bleacher Mall, charges Rich Clothing Store a rental fee of \($600\) per month plus 5% of yearly profits over \($500\),000. Matt Rich, the owner of the store, directs his accountant, Ron Hamilton, to increase the estimate of bad debt expense and warranty costs in order to keep profits at \($475\),000.

Instructions Answer the following questions.

(a) Should Hamilton follow his boss’s directive?

(b) Who is harmed if the estimates are increased?

(c) Is Matt Rich’s directive ethical?