Required information Problem 7-17A (Algo) Accounting for uncollectible accounts: two cycles using the percent of revenue allowance method LO 7-1 [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 $15,000 of common stock for cash. 2. Recognized $70,000 of service revenue earned on account. 3. Collected $62,000 from accounts receivable. 4. Paid operating expenses of $35,900. 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 $77,500 of service revenue on account. 2. Collected $70,000 from accounts receivable. 3. Determined that $1,000 of the accounts receivable were uncollectible and wrote them off. 4. Collected $200 of an account that had previously been written off. 5. Pald $49,500 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. Problem 7-17A (Algo) Part d-1 d-1. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. Complete this question by entering your answers in the tabs below. Req D1 Income Stmt Reg D1 Stmt of Changes Reg D1 Req D1 Stmt Balance Sheet of Cash Flows Prepare an income statement for Year 1. Financial Statements Income Statement For the Year Ended Year 1 Expenses Total expenses Reg D1 Income Stmt Req Di Stmt of Changes Reg D1 Reg Di Stmt Balance Sheet of Cash Flows Prepare the statement of changes in stockholders' equity for Year 1. JOVA COMPANY Statement of Changes in Stockholders' Equity For the Year Ended Year 1 Beginning common stock Ending common stock Beginning retained earnings Ending retained earnings Total stockholders' equity Req D1 Income Stmt Reg Di Stmt of Changes Reg D1 Reg Di Stmt Balance Sheet of Cash Flows Prepare the balance sheet for Year 1. JOVA COMPANY Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity Reg D1 Income Stmt Reg D1 Stmt of Changes Reg D1 Reg D1 Stmt Balance Sheet of Cash Flows Prepare the statement of cash flows for Year 1. (Amounts to be deducted should be indicated with a minus sign.) JOVA COMPANY Statement of Cash Flows For the Year Ended Year 1 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net cash flow from financing activities Net change in cash Ending cash balance
