Swan, Inc. is an accrual basis taxpayer. Swan uses the aging approach to calculate the reserve for bad debts. During 2010, the following occur associated with bad debts.
Credit sales $300,000
Collections on credit sales 280,000
Amount added to the reserve 12,000
Beginning balance in the reserve -0-
Identifiable bad debts during 2010 10,000
The amount of the deduction for bad debt expense for Swan for 2010 is:
a. $10,000.
b. $12,000.
c. $20,000.
d. $22,000.
e. None of the above.