Question

[The following information applies to the questions displayed below.) The following transactions apply to Jova Company for Year 1, the first year of operation: 1. Issued $17,000 of common stock for cash. 2. Recognized $217,000 of service revenue earned on account. 3. Collected $169,700 from accounts receivable. 4. Paid $132,000 cash for operating expenses. 5. Adjusted the accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 1 percent of sales on account. The following transactions apply to Jova for Year 2: 1. Recognized $327,000 of service revenue on account 2. Collected $342,000 from accounts receivable. 3. Determined that $2,500 of the accounts receivable were uncollectible and wrote them off. 4. Collected $1,500 of an account that had previously been written off. 5. Paid $212,000 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 0.5 percent of sales on account. Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2.

t-accounts should be for year 1

Answer 1

Answer

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Cash Accounts Receivable Common Stock Beg Bal. Service Reveue Cash Beg Bal. Cash 17000 169700 Beg Bal. Common Stock Account Receivable Operating Exp End Bal. 217000 170001 169700 132000 54700 End Bal. 47300 End Bal. 17000 Allowance for Doubtfull Debt Beg Bal. Uncollectible Account Expense Service Revenue Beg Bal. Accounts Receivable 217000 Uncollectible Account Expense Beg Bal. Allowance for Doubtfull Debt 2170 2170 End Bal. 2170 End Bal. 2170001 End Bal. 2170 Operating Expense Note : We have prepared T accounts only for year 1 as student has asked only T accounts only Beg Bal. Cash 132000 End Bal. 132000