During 2015,its First Year of Operations,a Company Provides Services on Account

question 136

Essay

During 2015,its first year of operations,a company provides services on account of $250,000.By the end of 2015,cash collections on these accounts total $130,000.The company estimates that 10% of accounts receivable will be uncollectible.Record the adjustment for uncollectible accounts on December 31,2015.

---

Definitions:

Direct Materials Used

Direct materials used are the raw materials directly incorporated into a product being manufactured, contributing to the cost of goods sold.

Factory Overhead

All indirect costs associated with manufacturing, including indirect labor, materials, and expenses that cannot be directly traced to a product.

Current Assets

Cash and other assets that are expected to be converted to cash or sold or used up, usually within one year or less, through the normal operations of the business.

Total Manufacturing Costs

The aggregate of expenses related to producing goods, including raw materials, labor, and overhead costs.