What is net realizable value of Cowen accounts receivable

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Reference no: EM132882211

Problem - Aging Analysis 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 discloses the following information:

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

3. Prepare the journal entry to record Cowen's estimated uncollectibles, assuming the balance in Allowance for Doubtful Accounts prior to adjustment is:

a. 0

b. $3,000 (debit)

c. $2,800 (credit)

Reference no: EM132882211

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