GK Company, a calendar year accrual basis taxpayer, made the following adjustments to its allowance for bad debts this year:

January 1 allowance for bad debts	$	86,700
Actual write-offs of accounts receivable		(77,900	)
Addition to allowance at year-end		90,600
December 31 allowance for bad debts	$	99,400

1. Compute GK's bad debt expense for financial statement purposes.
2. Compute GK's tax deduction for bad debts.

Compute GK's tax deduction for bad debts.

Bad debt expense

$86,700 WRONG

Tax deduction

$99,400 WRONG