Question
On November 30, Year 1, a restaurant ordered $2,000 of wines and cheeses from the Wine and Cheese Depot. The products were dropped off in
On November 30, Year 1, a restaurant ordered $2,000 of wines and cheeses from the Wine and Cheese Depot. The products were dropped off in the first week of December (Year 0). The bill was due by January 31, Year 2. On December 15, Year 1, the restaurant told the Depot them that the restaurant may only be able to pay $1,000 of the final bill in Year 2 as a food inspector was threatening to close the business down unless they made costly changes to the restaurant building. The restaurant owners were not sure the restaurant could afford the changes but were deliberating whether they could swing the costs to be able to keep their doors open. As a result, the Depot credited its allowance for doubtful accounts and debited bad debt expense for book purposes with the $1,000 difference in Year 1. (Taxpayer of interest: the Depot)
Fill in the blank: In Year 1, the amount of book-tax difference is $_______.
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