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Cowen s , a large department store located in a metropolitan area, has been experiencing difficulty in estimating its bad debts. The company has decided

Cowens, a large department store located in a metropolitan area, has been experiencing difficulty in estimating its bad debts. The company has decided to prepare an aging schedule for its outstanding accounts receivable and estimate bad debts by the due dates of its receivables. This analysis discloses the following information:
Balance Age of Receivable Estimated Percentage Uncollectible
$195,000 Under 30 days 0.8%
118,00030-60 days 2.0%
73,00061-120 days 5.0%
41,000121-240 days 20.0%
25,000241-360 days 35.0%
19,000 Over 360 days 60.0%
$471,000
Required:
1. Use the preceding analysis to compute the estimated amount of uncollectible receivables.
2. What is the net realizable value of Cowens accounts receivable?
3. Prepare the Dec. 31 journal entry to record Cowens estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is:
A.0
B. $3,200(debit)
C. $2,500(credit)

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