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:

Required:

Balance

Age of Receivable

Estimated Percentage Uncollectible

$193,000

Under 30 days

0.8%

114,000

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%

$465,000

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.	$2,800 (credit)

Prepare the journal entry on June 30 to record Cowens estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is $0.

How does grading work?

PAGE 9

GENERAL JOURNAL

Score: 25/25

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

Points:

5 / 5

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Check My Work

The balance in the allowance account, before adjustment, could be a debit or a credit. The purpose of the adjustment is to make the balance in the allowance account agree with the analysis.

Prepare the journal entry on June 30 to record Cowens estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is a $3,000 debit.

How does grading work?

PAGE 9

GENERAL JOURNAL

Score: 21/25

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

Points:

4.2 / 5

Prepare the journal entry on June 30 to record Cowens estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is a $2,800 credit.

How does grading work?

PAGE 9

GENERAL JOURNAL

Score: 18/25

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

Points:

3.6 / 5

X

Analysis

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