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 dis loses 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 CHART OF ACCOUNTS Cowen’s General Ledger ASSETS 111 Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 141 Inventory 152 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 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 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 $0. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3b. 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 $3,000 debit. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3c. 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 Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 1. Use the Aging analysis to compute the estimated amount of uncollectible receivables. The estimated amount uncollectible based on the data provided is . 2. What is the net realizable value of Cowen’s accounts receivable? Net realizable value of accounts receivable .

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 dis loses 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 CHART OF ACCOUNTS Cowen’s General Ledger ASSETS 111 Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 141 Inventory 152 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 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 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 $0. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3b. 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 $3,000 debit. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3c. 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 Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 1. Use the Aging analysis to compute the estimated amount of uncollectible receivables. The estimated amount uncollectible based on the data provided is . 2. What is the net realizable value of Cowen’s accounts receivable? Net realizable value of accounts receivable .

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 85APSA: Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto...

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loses 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

CHART OF ACCOUNTS

Cowen’s

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
141	Inventory
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
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

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 $0.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

3b. 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 $3,000 debit.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

3c. 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 Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

1. Use the Aging analysis to compute the estimated amount of uncollectible receivables.

The estimated amount uncollectible based on the data provided is

2. What is the net realizable value of Cowen’s accounts receivable?

Net realizable value of accounts receivable

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