View Review Mailings References 7. EFG, an accrual basis calendar year corporation, reported $722,000 net income before tax on its financial statements prepared in accordance with GAAP EFG's records reveal the following information The allowance for bad debts as of January 1 was $69,250. Write-offs for the year totaled $21,100, and the addition to the allowance for the year was $19,500. The allowance as of December 31 was $67,650 EFG paid a $25,270 fine to the state of Delaware for a violation of state pollution control laws EFG was sued by a consumers' group for engaging in false advertising practices. Although EFG's lawyers are convinced that the suit is frivolous, its independent auditors insisted on establishing a $72,200 allowance for contingent legal liability and reporting a $72,200 accrued expense on the income statement EFG incurred $22,000 of entertainment costs and $32,000 of business meals, Required: Compute EFG's taxable income Item Amount Book income Taxable income