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 $28,000 of common stock for cash. 2. Recognized $228,000 of service revenue earned on account. 3. Collected $181,800 from accounts receivable. 4. Paid $143,000 cash for operating expenses. 5. Adjusted the 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 $338,000 of service revenue on account. 2. Collected $353,000 from accounts receivable. 3. Determined that $3,050 of the accounts receivable were uncollectible and wrote them off. 4. Collected $2,600 of an account that had previously been written off. 5. Paid $223,000 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. 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 a. Identify the type of each transaction (asset source, asset use, asset exchange, or claims exchange). Event Number Type of Transaction Year 1 1. 2. 3. 4. 5. Year 2 1. 2. 3. 4a. 4b. 5. 6. b. Show the effect of each transaction on the elements of the financial statements, using a horizontal statements model. Use + for increase, for decrease, and leave cell blank for not affected. Also, in the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), Investing activity (IA), or financing activity (FA). Leave blank to indicate that an element was not affected by the event. The first transaction is entered as an example. (Hint: Closing entries do not affect the statements model.) Horizontal Statements Model Balance Sheet Income Statement Transactions Assets Liabilities Stockholders' Equity Net Revenue Expenses Statement of Cash Flows Income Year 1 1. 2. 3. 4. 5. Year 2 1. 2. 3. 4a. 4b. 5. 6. + FA View transaction list Journal entry worksheet < A B C D E Record entry for issuance of common stock. Note: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal View transaction list Journal entry worksheet < A B C D E F G Record service revenue on account.. Note: Enter debits before credits. Event 1. General Journal Debit Credit Record entry Clear entry View general journal ces Complete this question by entering your answers in the tabs below. Income Statement Statement of Balance Sheet Cash Flows Changes Prepare the income statement for Year 1. JOVA COMPANY Income Statement For the Year Ended Year 1 Expenses Total expenses