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:
Instructions Cowen's, 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% 118,000 30-80 days 2.0% 73,000 01-120 days 5.0% 41.000 121-240 days 20.0% 25,000 241-360 days 35,0% 19.000 Over 360 days 80 0% 5471.000 Required: 1. Use the preceding analysis to compute the estimated amount of uncollectible receivables. 2. What is the net realizable value of Cowen's accounts receivable? 3. Prepare the joumal entry to record Cowen's estimated uncollectibles, assuming the balance in Alowance for Doubtful Accounts prior to adjustment is AO B. $3,200 (debit) C. $2,500 (credit) Instructions Chart of Accounts Analysis General Journal Chart of Accounts CHART OF ACCOUNTS Cowen's General Ledger REVENUE 411 Sales Revenue ASSETS 111 Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 141 Inventory 152 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation EXPENSES 500 Cost of Goods Solid 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 281 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings Aging Analysis of Accounts Receivable Instructions Chart of Accounts Analysis General Journal Analysis 1. Use the Aging analysis to compute the estimated amount of uncollectible receivables The estimated amount uncollectible based on the data provided is s 2. What is the net realizable value of Cowen's accounts receivable? Net realizable value of accounts receivables General Journal 3a. Prepare the journal entry on June 30 to record Cowen's estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is 50 General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF: DOBIT CREDIT 2 36. Prepare the joumal entry on June 30 to record Cowen's estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is a $3,200 debt. General Joumal Instructions PAGE 1 Aging Analysis of Accounts Receivable Instructions Chart of Accounts Analysis General Journal General Journal PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF: DEBIT CREDIT : 2 30. Prepare the journal entry on June 30 to record Cowen's estimated uncollectibles assuming the balance in Allowance for Doubtful Accounts prior to adjustment is a $2,500 credit General Joumal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT . 2
