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 $17,500 of common stock for cash. 2. Recognized $62,500 of service revenue earned on account. 3. Collected $56,000 from accounts receivable. 4. Paid operating expenses of $36,800. 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 $70,000 of service revenue on account. 2. Collected $64,000 from accounts receivable. 3. Determined that $850 of the accounts receivable were uncollectible and wrote them off. 4. Collected $100 of an account that had previously been written off. 5. Paid $48,000 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 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. c. Organize the transaction data in accounts under an accounting equation. Complete this question by entering your answers in the tabs below. Req C1 Req C2 Show less A Organize the transaction data in accounts under an accounting equation for Year 2. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) JOVA COMPANY Accounting Equation for the Year 2 Assets Equity Event Liabilities Cash NRV Accounts Receivable Common Stock Retained Earnings Accounts Titles for Retained Earnings Bal. 36,700 + 1. 2. 64,000 + 6,500 = 70,000 (64,000)= 1,250 + 17,500 + 24,450 + 70,000 Service revenue + 3. (850) = 4a. 100 = (850) + 100+ 4b. 100+ (100) = 5. (48,000) + = 6. = Bal. 52,800+ 11,650 = 700+ 1,200+ (48,000) Operating expenses (700) Uncollectible accounts expense 17,500+ 45,750 < Req C1 Req C2 > 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 $17,500 of common stock for cash. 2. Recognized $62,500 of service revenue earned on account. 3. Collected $56,000 from accounts receivable. 4. Paid operating expenses of $36,800. 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 $70,000 of service revenue on account. 2. Collected $64,000 from accounts receivable. 3. Determined that $850 of the accounts receivable were uncollectible and wrote them off. 4. Collected $100 of an account that had previously been written off. 5. Paid $48,000 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 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. c. Organize the transaction data in accounts under an accounting equation. Complete this question by entering your answers in the tabs below. Req C1 Req C2 Show less A Organize the transaction data in accounts under an accounting equation for Year 1. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) JOVA COMPANY Accounting Equation for the Year 1 Assets Equity Event Cash NRV Accounts Receivable Liabilities + Common Accounting Titles for Retained Stock Retained Earnings Earnings 1. 17,500 + + 17,500+ 2. + 62,500 + + 62,500 Service revenue 3. 56,000 + (56,000) + + 4. (36,800) + + + (36,800) Operating expenses 5. + 1,250 + Bal. 36,700 + 6,500 = 1,250 + 17,500+ < Req C1 (1,250) Uncollectible accounts expense 24,450 Req C2 > Check my work During the first year of operation, Year 1, McGinnis Appliance recognized $376,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $73,912. Even though this is his first year in business, the owner believes he will collect all but about 5 percent of the ending balance. Required a. What amount of cash was collected by McGinnis during Year 1? b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1? c. What is the net realizable value of receivables at the end of Year 1? d. Show the effect of these transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If element is not affected by the event, leave the cell blank. Complete this question by entering your answers in the tabs below. Req A to C Req D a. What amount of cash was collected by McGinnis during Year 1? b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1? (Round your final answer to nearest whole dollar amount.) c. What is the net realizable value of receivables at the end of Year 1? (Do not round intermediate calculations and round your final answer to nearest whole dollar amount.) A. Cash collected B. Uncollectible accounts expense C. Net realizable value < Req A to C Req D > Show less During the first year of operation, Year 1, McGinnis Appliance recognized $376,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $73,912. Even though this is his first year in business, the owner believes he will collect all but about 5 percent of the ending balance. Required a. What amount of cash was collected by McGinnis during Year 1? b. Assuming the use of an allowance system to account for uncollectible accounts, what amount should McGinnis record as uncollectible accounts expense in Year 1? c. What is the net realizable value of receivables at the end of Year 1? d. Show the effect of these transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If element is not affected by the event, leave the cell blank. Complete this question by entering your answers in the tabs below. Req A to C Req D Show the effect of these transactions on the financial statements by recording the appropriate amounts in a horizontal statements model like the one shown here. Wher you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If element is not affected by the event, leave the cell blank. (Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) MCGINNIS APPLIANCE Accounting Equation for the Year 1 Assets Income Statement Event No. Statement of Cash Cash NRV Accounts Receivable Liabilities Equity Revenue Expense = Net Income Flow 1. 2. + = = 3. < Req A to C Req D > Show less