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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.

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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Required Information **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 $20,000 of common stock for cash. 2. Recognized $60,000 of service revenue earned on account. 3. Collected $54,000 from accounts receivable. 4. Paid operating expenses of $37,800. 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 Year 2: 1. Recognized $67,500 of service revenue on account. 2. Collected $62,000 from accounts receivable. 3. Determined that $800 of the accounts receivable were uncollectible and wrote them off. 4. Collected $300 of an account that had previously been written off. 5. Paid $47,500 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 10 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.
Transcribed Image Text:### Required Information **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 $20,000 of common stock for cash. 2. Recognized $60,000 of service revenue earned on account. 3. Collected $54,000 from accounts receivable. 4. Paid operating expenses of $37,800. 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 Year 2: 1. Recognized $67,500 of service revenue on account. 2. Collected $62,000 from accounts receivable. 3. Determined that $800 of the accounts receivable were uncollectible and wrote them off. 4. Collected $300 of an account that had previously been written off. 5. Paid $47,500 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 10 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.
# Jova Company Horizontal Statements Model ## Overview This table represents the horizontal statements model for Jova Company, detailing changes across assets, liabilities, equity, revenues, expenses, net income, and cash flows over two years. ### Column Headers - **Event No.**: Indicates the sequence of transactions or events. - **Assets**: Changes in assets, denoted by "+" or "–". - **Liabilities**: Changes in liabilities, including increases or decreases. - **Equity**: Changes in equity, indicating alterations in ownership value. - **Revenues**: Revenue changes that affect the income. - **Expenses**: Changes in expenses, related to operational costs. - **Net Income**: Effect on net income, indicating profit or loss dynamics. - **Statement of Cash Flow**: Tracks cash flow activities: - **FA**: Financing Activities - **OA**: Operating Activities - **IA**: Investing Activities (not shown) ### Detailed Explanation by Year #### Year 1 1. **Event 1**: - Assets increase. - No change in liabilities or equity. - Positive impact on revenues and net income. - Financing activity (FA). 2. **Event 2**: - Assets increase. - No change in liabilities or equity. - Positive impact on net income. - Operating activity (OA). 3. **Event 3**: - Assets fluctuate slightly. - No change in liabilities or equity. - Positive impact on net income. - Operating activity (OA). 4. **Event 4**: - Assets decrease. - No change in liabilities. - Equity increases. - Positive impact on revenues and net income. 5. **Event 5**: - Assets decrease. - Liability increase. - Negative net income effect. - Operating activity (OA). #### Year 2 1. **Event 1**: - Assets increase. - No change in liabilities or equity. - Positive revenue effect. - Operating activity (OA). 2. **Event 2**: - Assets fluctuate. - No change in liabilities. - Positive net income impact. - Operating activity (OA). 3. **Event 3**: - Assets decrease. - Liability increase. - Negative cash flow effect
Transcribed Image Text:# Jova Company Horizontal Statements Model ## Overview This table represents the horizontal statements model for Jova Company, detailing changes across assets, liabilities, equity, revenues, expenses, net income, and cash flows over two years. ### Column Headers - **Event No.**: Indicates the sequence of transactions or events. - **Assets**: Changes in assets, denoted by "+" or "–". - **Liabilities**: Changes in liabilities, including increases or decreases. - **Equity**: Changes in equity, indicating alterations in ownership value. - **Revenues**: Revenue changes that affect the income. - **Expenses**: Changes in expenses, related to operational costs. - **Net Income**: Effect on net income, indicating profit or loss dynamics. - **Statement of Cash Flow**: Tracks cash flow activities: - **FA**: Financing Activities - **OA**: Operating Activities - **IA**: Investing Activities (not shown) ### Detailed Explanation by Year #### Year 1 1. **Event 1**: - Assets increase. - No change in liabilities or equity. - Positive impact on revenues and net income. - Financing activity (FA). 2. **Event 2**: - Assets increase. - No change in liabilities or equity. - Positive impact on net income. - Operating activity (OA). 3. **Event 3**: - Assets fluctuate slightly. - No change in liabilities or equity. - Positive impact on net income. - Operating activity (OA). 4. **Event 4**: - Assets decrease. - No change in liabilities. - Equity increases. - Positive impact on revenues and net income. 5. **Event 5**: - Assets decrease. - Liability increase. - Negative net income effect. - Operating activity (OA). #### Year 2 1. **Event 1**: - Assets increase. - No change in liabilities or equity. - Positive revenue effect. - Operating activity (OA). 2. **Event 2**: - Assets fluctuate. - No change in liabilities. - Positive net income impact. - Operating activity (OA). 3. **Event 3**: - Assets decrease. - Liability increase. - Negative cash flow effect
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