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 $13,500 of common stock for cash. 2. Recognized $68,500 of service revenue earned on account 3. Collected $60,800 from accounts receivable. 4. Pald operating expenses of $35,600. 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 $76,000 of service revenue on account 2. Collected $68,800 from accounts receivable. 3. Determined that $970 of the accounts receivable were uncollectible and wrote them off. 4. Collected $200 of an account that had previously been written off. 5. Pald $49,200 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. d-2. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 2. Complete this question by entering your answers in the tabs below. Reg D2 Reg D2 Stmt Req D2 Req D2 Stmt Income Stmt of Changes Balance Sheet of Cash Flows Prepare an income statement for Year 2. JOVA COMPANY Income Statement For the Year Ended Year 2 s 76,800 Service revenue Expenses Operating expenses Uncollectible accounts expense (49,200) (166) Total expenses (49,366) 27,234 Net income Req D2 Income Stmt Req D2 Stmt of Changes Complete this question by entering your answers in the tabs below. Reg D2 Reg D2 Stmt Req D2 Req D2 Stmt Income Stmt of Changes Balance Sheet of Cash Flows Prepare the statement of changes in stockholders' equity for Year 2. JOVA COMPANY Statement of Changes in Stockholders' Equity For the Year Ended Year 2 Beginning common stock 13,500 Ending common stock $ 13,500 Beginning retained earnings $ 31.530 s Ending retained earnings Total stockholders' equity 31.530 45.030 s Complete this question by entering your answers in the tabs below. Reg D2 Req D2 Stmt Req D2 Reg D2 Stmt Income Stmt of Changes Balance sheet of Cash Flows Prepare the balance sheet for Year 2. JOVA COMPANY Balance Sheet As of December 31, Year 2 Assets Cash s 58,500 Accounts receivable $ 14,530 Less: Allowance for doubtful accounts (766) 13,764 Total assets $ 72,264 0 Liabilities $ Stockholders' equity Common stock Retained earnings $ 13,500 58,764 Total stockholders' equity Total liabilities and stockholders' equity 72,264 72.264 s Complete this question by entering your answers in the tabs below. Reg D2 Reg D2 Stmt Reg D2 Reg D2 Stmt Income Stmt of Changes Balance Sheet of Cash Flows Prepare the statement of cash flows for Year 2. (Amounts to be deducted should be indicated with a minus sign.) JOVA COMPANY Statement of Cash Flows For the Year Ended Year 2 Cash flows from operating activities: Inflow from customers $ 69.000 Outflow for expenses (49,200) $ 19.800 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance 19.800 38.500 58,300 $