Monro Inc. uses the accrual method of accounting. Here is a reconciliation of Monro's allowance for bad debts for the current year.Beginning allowance for bad debts?$ 61,150??Actual write-offs of accounts receivable during the year?(80,000)?Addition to allowance? 88,500??Ending allowance for bad debts?$ 69,650??Because of the difference between the GAAP and the tax rules for accounting for bad debts, Monro Inc. has an:
A. $8,500 permanent excess of taxable income over book income.
B. $8,500 temporary excess of taxable income over book income.
C. $8,500 temporary excess of book income over taxable income.
D. $8,500 permanent excess of book income over taxable income.
Answer: B
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