E6-18 Inferring Bad Debt Expense and Determining the Impact of Uncollectible Accounts on Income and Working Capital LO6-2 A recent annual report for Target contained the following information (dollars in thousands) at the end of Its fiscal year, Year 2 Year 1 Accounts receivable $ 9,080,000 $ 8,614,000 Allowance for doubtful accounts (1,018, 000) (562,000) $ 8,062,000 $ 8,052,000 A footnote to the financial statements disclosed that uncollectible accounts amounting to $816,000 and $418,000 were written off as bad debts during year 2 and year 1, respectively. Assume that the tax rate for Target was 35 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 answers in thousands not in dollars.) Bad debt expense 2. Working capital is defined as current assets minus current liabilities. Would the working capital be affected by the write-off of an uncollectible account? Yes No 3.Would the net income be affected by the $816,000 write-off during year 2? Yes No