The chief accountant of Shirts Galore Ltd believes that the entity’s yearly allowance for doubtful debts should be 2% of net credit sales. The managing director of Shirts Galore Ltd, nervous that the shareholders might expect the entity to sustain its 10% growth rate, suggests that the chief accountant increase the allowance for doubtful debts to 4%. The managing director thinks that the lower profit, which reflects a 6% growth rate, will be a more sustainable rate for Shirts Galore Ltd. 

Required

(a) Who are the stakeholders in this case?

(b) Does the managing director’s request pose an ethical dilemma for the chief accountant?

(c) Should the chief accountant be concerned with Shirts Galore Ltd’s growth rate in estimating the allowance? Explain your answer.