Question

Help Sa The following transactions apply to Jova Company for 2018, the first year of operation: 1. Issued $12.500 of common stock for cash. 2. Recognized $67,500 of service revenue earned on account. 3. Collected $60,000 from accounts receivable. 4. Paid operating expenses of $35,400. 5. 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 2019: 1. Recognized $75,000 of service revenue on account. 2. Collected $68,000 from accounts receivable. 3. Determined that $950 of the accounts receivable were uncollectible and wrote them off. 4. Collected $300 of an account that had previously been written off. 5. Paid $49,000 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for 2019. Jova estimates uncollectible accounts expense will be 10 percent of sales on account. Required Complete the following requirements for 2018 and 2019. Complete all requirements for 2018 prior to beginning the requirements for 2019 < Previous Next >

Answer 1

Requirement D2

Income Statement:

JOVA COMPANY
Income Statement
For the Year Ended 2019
Revenues		$75,000
Expenses:
Operating expenses	$49,000
Bad debt expense (75,000 x 1%)	$750
Total expenses		$49,750
Net income		$25,250

Statement of changes in Stockholders' Equity:

JOVA COMPANY
Statement of Changes in Stockholders' Equity
For the Year Ended 2019
Beginning common stock	$12,500
Additional common stock	$0
Ending Common stock	$12,500
Beginning retained earnings	$30,750
Net income	$25,250
Ending retained earnings	$56,000
Total stockholders' equity		$68,500

Balance Sheet:

JOVA COMPANY
Balance Sheet
As of December 31,2019
Assets
Cash		$56,400
Accounts receivable	$13,550
(Less): Allowance for doubtful accounts	($1,450)	$12,100
Total assets		$68,500
Liabilities		$0
Stockholders' equity:
Common stock (taken from above)	$12,500
Retained earnings (taken from above)	$56,000
Total Stockholders' equity		$68,500
Total liabilities and stockholders' equity		$68,500

Statement of Cash Flows:

JOVA COMPANY
Statement of Cash Flows
For the Year Ended 2019
Cash flows from operating activities:
Collections from customers (68,000+300)	$68,300
Paid Operating expenses	($49,000)
Net cash flow from operating activities		$19,300
Cash flows from investing activities
Cash flows from financing activities
Net change in cash		$19,300
Beginning cash balance		$37,100
Ending cash balance		$56,400

Calculations:

i.For Beginning balance in 2019, Calculations for 2018:

Cash
$12,500	$35,400
$60,000
End.$37,100
Accounts receivable
$67,500	$60,000
End.$7,500

Net income (2018)
Revenues	$67,500
Expenses:
Operating expenses	($35,400)
Bad debt expenses (67,500 x 2%)	($1,350)
Net income (Retained earnings balance)	$30,750

ii. Calculations for 2019:

Accounts receivable
Beginning	$7,500
Sales	$75,000
Collections	($68,000)
Written off	($950)
Collections	($300)
Ending balance	$13,250

Allowance for doubtful account
Beginning	$1,350
Written off	($950)
Re-instate	$300
Bad debt expense	$750
Ending balance	$1,450