Analyzing the activity in the allowance account
The information below was taken from the footnotes of JPMorgan Chase”s 2008 annual report. The December 31, 2008, balance in the allowance account was $23,164 (dollars in millions).
|
2008 |
2007 |
2006 |
|
|
Allowance at Jan 1 |
$9,234 |
$7,279 |
$7,090 |
|
Provision for losses |
23,764 |
6,549 |
3,231 |
|
Recoveries |
929 |
829 |
842 |
REQUIRED:
Compute the actual write-offs recognized by JPMorgan Chase in 2006, 2007, and 2008. Comment on JPMorgan Chase”s annual estimates. Discuss the reasons underlying the 2008 amounts.