Question

The following transactions apply to Jova Company for 2018, the first year of operation:

1. Issued $10,000 of common stock for cash.

2. Recognized $210,000 of service revenue earned on account.

3. Collected $162,000 from accounts receivable.

4. Paid operating expenses of $125,000.

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 1 percent of sales on account.

The following transactions apply to Jova for 2019:

1. Recognized $320,000 of service revenue on account.

2. Collected $335,000 from accounts receivable.

3. Determined that $2,150 of the accounts receivable were uncollectible and wrote them off.

4. Collected $800 of an account that had previously been written off.

5. Paid $205,000 cash for operating expenses.

6. Adjusted the accounts to recognize uncollectible accounts expense for 2019. Jova estimates uncollectible accounts expense will be 0.5 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.

event number	type of transaction
2018
1
2
3
4
5
2019
1
2
3
4a
4b
5
6

Answer 1

Event number	Type of transaction
2018
1	Asset source
2	Asset source
3	Asset exchange
4	Asset use
5	Asset ise
2019
1	Asset source
2	Asset exchange
3	Asset use
4a	Asset source
4b	Asset exchange
5	Asset use
6	Asset use

2018 :-

1.) Asset source because cash increase by $10,000.

2.) Account receivable is increase by $210,000.

3.) Account receivable decrease and cash increase by $162,000.

4.) Cash decrease by $125,000.

5.) Account receivable decrease by 1% of sales on account.

2019 :-

1.) Account receivable increase by $320,000.

2.) Account receivable decreases and cash increase by $335,000.

3.) Account receivable decrease by $2,150.

4a.) Increase account receivable by $800.

4b.) Decrease account receivable and increase cash by $800.

5.) Cash is decrease by $205,000.

6.) Account receivable is decrease by 0.5% of sales on account.