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Carey Corporation, a calendar-year taxpayer, employs the allowance method for its bad debts for financial...

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Accounting

Carey Corporation, a calendar-year taxpayer, employs the allowance method for its bad debts for financial reporting purposes. The credit balance in the allowance account was $100,000 on December 31 of last year. On December 31 of the current year, Carey determined that a reasonable allowance would be $87,500. Carey wrote off $75,000 against the allowance account during this year.

Careys current-year deduction for bad debt expense on its federal income tax return is

A.$62,500 B.$100,000 C.$75,000 D.$87,500

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