How do I calculate bad debt expense in this problem

Posted on 2013-11-22 15:51:00 in Accounting by MICHAEL

A recent annual report for Target contained the following information (dollars in thousands) at the last of its fiscal year:

Year 2

Accounts receivable $ 9,082,000

Allowance for doubtful accounts (1,027,000)



Year 1

Accounts receivable $ 8,625,000

Allowance for doubtful accounts (569,000)



A footnote to the financial statements disclosed that uncollectible accounts amounting to $827,000 and $427,000 were written off as bad debts during year 2 and year 1, respectively. Assume that the tax rate for Target was 30 percent.

Required:

1. Determine the bad debt expense for year 2 based on the preceding facts. (Hint: Use the Allowance for Doubtful Accounts T-account to solve for the missing value.) (Enter your answer in thousands. Omit the "$" sign in your response.)

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