ZEJ, a calendar year accrual basis taxpayer, made the following adjustments to its allowance for bad debts this year: January 1 allowance for bad debts $ 895,000 Actual write-offs of accounts receivable (840,000 ) Addition to allowance at year-end 770,000 December 31 allowance for bad debts $ 825,000 Compute ZEJ's bad debt expense for financial statement purposes. Compute ZEJ's tax deduction for bad debts.

In its first year of operations, sunland company recognized $30,000 in service revenue, $8,100 of which was on account and still outstanding at year-end. the remaining $21,900 was received in cash from customers. the company incurred operating expenses of $18,600. of these expenses, $12,880 were paid in cash; $5,720 was still owed on account at year-end. in addition, sunland prepaid $3,270 for insurance coverage that would not be used until the second year of operations. (a) calculate the first year's net earnings under the cash basis of accounting, and the first year's net earnings under the accrual basis of accounting.