Question

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $16,000 of common stock for cash. Recognized $64,000 of service revenue earned on account. Collected $57,200 from accounts receivable. Paid operating expenses of $36,200. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for Year 2: Recognized $71,500 of service revenue on account. Collected $65,200 from accounts receivable. Determined that $880 of the accounts receivable were uncollectible and wrote them off. Collected $100 of an account that had previously been written off. Paid $48,300 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 percent of sales on account. Required Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2. d-1. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1.

Answer 1