Question

The following transactions apply to Jova Company for Year 1, the first year of operation: 1. Issued $10,500 of common stock for cash. 2. Recognized $65,500 of service revenue earned on account. 3. Collected $58,400 from accounts receivable. 4. Paid operating expenses of $35,000 9. 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: 1. Recognized $73,000 of service revenue on account 2. Collected $66,400 from accounts receivable. 3. Determined that $910 of the accounts receivable were uncollectible and wrote them off. 4. Collected $200 of an account that had previously been written off 5. Paid $48,600 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1 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.

Answer 1

Jova Company
Year 1
Events	Type
1	AS
2	AS
3	AE
4	AU
5	AU
Year 2
Events	Type
1	AS
2	AE
3	AE
4a	AE
4b	AE
5	AU
6	AU
Simple explanation
Asset source is increase in assets
Asset use is decrease in assets
Asset exchange is exchange of one asset for another asset
Claims exchange is no change in asset, meaning exchange of liabilty for equity

Jova Company Year 1 Events Assets = Liabilties + Equity Revenues - Expenses = Net Income Cash Flows Statement + + FA OA OA Year 2 Events Assets = Liabilties + Equity Revenues - Expenses = Net Income Cash Flows Statement + OA + + + OA + +

Calculation + Jova Company Year 1 Assets = Liabilties + Equity Account Titles for Events Type Cash Accounts Rec - Allowance + Common Stock + Retained Earnings Retained Earnings AS 10,500 10,500 + | AS 65,500 65,500 Service Revenue || AE 58,400 (58,400) - AU (35,000) (35,000) Operating expense AU 1,310 (1,310) Bad debt expense Bal. 33,900 7,100 - 1,310 = 10,500 + 29,190 + + + + mi + + + + =65,500*2% Calculation + + + + + Year 2 Assets = Liabilties + Equity Events Type Cash Accounts Rec - Allowance + Common Stock + Retained Earnings Bal. 33,900 7,100 - 1,310 10,500 29,190 AS 73,000 - 73,000 Service Revenue 66,400 (66,400) - 3 AE (910) - (910) 4a AE 200 - 200 200 (200) - 5 AU (48,600) (48,600) Operating expense 6 AU 730 (730) Bad debt expense Bal. 51,900 12,790 - 1,330 = 10,500 + 52,860 + + + + AE + + + + + + =73,000*1% +