Pence Company Began 2013 with a Balance of $74,000 in Accounts

question 10

Essay

Pence Company began 2013 with a balance of $74,000 in accounts receivable and $4,300 in allowance for doubtful accounts. During the year, it provided $328,000 in services to customers on account and collected $290,000 in cash from its accounts receivable. Pence wrote off $3,250 of uncollectible accounts during 2013. At the end of the year, the company prepared an aging schedule and adjusted its accounts based on the estimate that $6,300 of receivables would not be collected.
Required:
a) Prepare the journal entries to record all the transactions related to accounts receivable, including the estimate of uncollectible accounts expense.
b) What was the net realizable value of Pence's accounts receivable at the end of 2013?

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated based on estimated overhead costs and an allocation base.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, calculated at the start of the fiscal year based on estimated costs and activities.

Labor-Hour

A measure of the amount of work or labor time required or used to produce a good or service.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead that should have been incurred based on the efficiency of operations.