Allowance for Credit Losses Tompkins Trustco Inc., a multibank holding company headquartered in Ithaca, New York, included the following in the footnotes to its 2002 annual report: The following is a summary of changes in the reserve for loan/lease losses ($ in thousands):

2002 Reserve at beginning of year $10,706 Loans/leases charged off (1,721) Recoveries 484 Provision charged to operations 2,235 Reserve at end of year $11,704 1. Terminology in bank financial statements sometimes differs slightly from that in statements of industrial companies. Explain what is meant by "reserve for loan/lease losses," "provision charged to operations," and "loans/leases charged off" in the footnote. 2. Prepare the 2002 journal entries to record the writing off of specific credit losses, the recovery of previously written off credit losses, and the charge for credit losses against 2002 income. Omit explanations. 3. Suppose the bank analyzed its loans at the end of 2002 and decided that a reserve for losses equal to $10 million was required. Compute the provision that would be charged in 2002. 4. The bank had income before income taxes of $34,340 thousand in 2002. Compute the income before income taxes if the reserve for losses at the end of 2002 had been $10 million?