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 $16,000 of common stock for cash. 2. Recognized $64.000 of service revenue earned on account. 3. Collected $57,200 from accounts receivable. 4. Paid operating expenses of $36,200. 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 $71,500 of service revenue on account. 2. Collected $65,200 from accounts receivable. 3. Determined that $880 of the accounts receivable were uncollectible and wrote them off. 4. Collected $100 of an account that had previously been written off. 5. Pald $48.300 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, Problem 7-17A (Algo) Part a a. Identify the type of each transaction (asset source, asset use, asset exchange, or claims exchange). Event No. Type of Transaction Year 1 1 2 3 Asset source Asset source Asset exchange Asset use 'Asset use 4. 5 Year 2 1 2. 3 4a 'Asset source 'Asset exchange Asset source Asset exchange Asset exchange Asset use Asset use 4b. 5. 6 b. Show the effect of each transaction on the elements of the financial statements, using a horizontal statements model like the one shown here. The first transaction is entered as an example. (Columns for events that have no effect on any of the elements should be left blank.) (Use - for increase or - for decrease. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Not all cells will require input.) JOVA COMPANY Horizontal Statements Model Balance Sheet Income Statement - Liabilities + Stockholders Revenues Equity Expenses - Net Income Event No. Statement of Cash Flows Assets FA Year 1 1 2 3 4 5 Year 2 1 2 3 4a = 45 5 Problem 7-17A (Algo) Part c. Organize the transaction data in accounts under an accounting equation for each year, Complete this question by entering your answers in the tabs below. Show less Required Required C2 Organize the transaction data in accounts under an accounting equation for Year 1. (Enter any decreases to account balances with a minus sign. Not all cells require input.) JOVA COMPANY Accounting Equation for Year 1 Assets Stockholders' Equity Event NRV - Liabilities Account Titles for Retained Earnings Cash + Accounts Common Retained stock Receivable Earnings 1 2 3 - 4 + 5 Bal 0 0 0 Required information Show less Required C Required C2 Organize the transaction data in accounts under an accounting equation for Year 2. For event 4, reinstate the customer's account receivable in 4a and record the receipt of payment on account in 4b. (Enter any decreases to account balances with a minus sign. Not all cells require input.) JOVA COMPANY Accounting Equation for Year 2 Assets Stockholders' Equity Event NRV Liabilities Cash Accounts Common Retained Account Titles for Retained Earnings Receivable Stock Earnings Bal 1 2 3 4a 45 5. 6 Bal O. 0 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. Reg Di Reg D1 Stmt Reg D1 Reg Di Stmt Income Stmt of Changes 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 $ 0 Ending common stock Beginning retained earnings Ending retained earnings Total stockholders' equity 0 0 $ d-1. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year Complete this question by entering your answers in the tabs below. Reg D1 Reg D1 Stmt Reg D1 Reg Di Stmt Income Stmt of Changes Balance Sheet of Cash Flows Prepare the balance sheet for Year 1. JOVA COMPANY Balance Sheet As of December 31, Year 1 Assets 0 0 $ Total assets Liabilities Stockholders' equity Total stockholders' equity 0 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. Reg D: Reg Di Stmt Reg D1 Reg Di Stet Income Stmt of Changes 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 $ 0 Net cash flow from financing activities Net change in cash 0 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 Reg D2 Req D2 Stmt Income Smt of Changes Balance Sheet of Cash Flows Prepare an income statement for Year 2. JOVA COMPANY Income Statement For the Year Ended Year 2 Expenses Total expenses Req D2 Income Sumi Reg D2 Stmt of Changes > 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 Reg D2 Reg 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 Ending common stock Beginning retained earnings Ending retained earnings Total stockholders' equity 2. 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 balance sheet for Year 2. JOVA COMPANY Balance Sheet As of December 31, Year 2 Assets Total assets Liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity N Complete this question by entering your answers in the tabs below. Reg D2 Reg D2 Stmt Reg D2 Req 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: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Ending cash balance