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
$191,000	Under 30 days	0.8%
118,000	30-60 days	2.0%
73,000	61-120 days	5.0%
41,000	121-240 days	20.0%
25,000	241-360 days	35.0%
19,000	Over 360 days	60.0%
$467,000

Required:

1.

Use the preceding analysis to compute the estimated amount of uncollectible receivables.

2.

Prepare the journal entry to record Cowens estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is:

A.	0
B.	$3,000 (debit)
C.	$2,500 (credit)