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 $27,000 of common stock for cash. 2. Recognized $227,000 of service revenue earned on account. 3. Collected $180,700 from accounts receivable. 4. Paid $142,000 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 1 percent of sales on account. The following transactions apply to Jova for Year 2: 1. Recognized $337,000 of service revenue on account. 2. Collected $352,000 from accounts receivable. 3. Determined that $3,000 of the accounts receivable were uncollectible and wrote them off. 4. Collected $2,500 of an account that had previously been written off. 5. Paid $222,000 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 0.5 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 Type of Transaction Number Year 1 1. 2. 3. 4. 5. Year 2 1. 2. 3. 4a. 4b. 5. 6. 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 $27,000 of common stock for cash. 2. Recognized $227,000 of service revenue earned on account. 3. Collected $180,700 from accounts receivable. 4. Paid $142,000 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 1 percent of sales on account. The following transactions apply to Jova for Year 2: 1. Recognized $337,000 of service revenue on account. 2. Collected $352,000 from accounts receivable. 3. Determined that $3,000 of the accounts receivable were uncollectible and wrote them off. 4. Collected $2,500 of an account that had previously been written off. 5. Paid $222,000 cash for operating expenses. 6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 0.5 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. 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 Revenue Expenses Net Income Statement of Cash Flows Year 1 1. + 2. + 3. +/- +/- 4. 5. + FA + OA OA OA OA Year 2 1. + 2. +/- 3. +/- 4a. 4b. 5. 6. +/- + FA OA +/- +/- +/- OA OA OA OA c-1. Record the Year 1 transactions in general journal form and post them to T-accounts. Complete this question by entering your answers in the tabs below. General Journal T Accounts Post the Year 1 transactions to T-accounts. Beginning Balance Balance Before Closing Cash Accounts Receivable Beginning Balance Balance Before Closing Common Stock Allowance For Doubtful Accounts Beginning Balance Beginning Balance Balance Before Closing Balance Before Closing Service Revenue Uncollectible Accounts Expense Beginning Balance Beginning Balance Balance Before Closing Balance Before Closing Operating Expenses Beginning Balance Balance Before Closing < General Journal T Accounts c-1. Record the Year 1 transactions in general journal form and post them to T-accounts. Complete this question by entering your answers in the tabs below. General Journal T Accounts Record the year 1 transactions in general journal form. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Event General Journal A 1 Cash Common stock B 2 Accounts receivable Service revenue 3 Cash Accounts receivable D 4 Operating expenses Cash E 5 Uncollectible accounts expense Allowance for doubtful accounts < General Journal T Accounts > Debit Credit 27,000 27,000 227,000 227,000 180,700 180,700 142,000 142,000 2,270 2,270 c-2. Record the Year 2 transactions in general journal form and post them to T-accounts (begin Year 2 with the ending T-account balances from Year 1). Complete this question by entering your answers in the tabs below. General Journal T Accounts Record the year 2 transactions in general journal form. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 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 < General Journal T Accounts > c-2. Record the Year 2 transactions in general journal form and post them to T-accounts (begin Year 2 with the ending T-account balances from Year 1). Complete this question by entering your answers in the tabs below. General Journal T Accounts Post the Year 2 transactions to T-accounts. Beginning Balance Cash Accounts Receivable Beginning Balance Balance Before Closing Balance Before Closing Common Stock Retained Earnings Beginning Balance Beginning Balance Balance Before Closing Balance Before Closing Service Revenue Operating Expenses Beginning Balance Beginning Balance Balance Before Closing Balance Before Closing Allow. For Doubtful Accounts Uncoll. Accts. Expense Beginning Balance Beginning Balance Balance Before Closing Balance Before Closing 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. Income Statement Statement of Balance Sheet Cash Flows Changes Prepare the income statement for Year 1. Service revenue JOVA COMPANY Income Statement For the Year Ended Year 1 Expenses Uncollectible accounts expense Total expenses Net income Income Statement 0 $ 0 Statement of Changes > 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. Income Statement Statement of Balance Sheet Cash Flows Changes 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 $ 0 0 $ 0 Total Stockholders' Equity < Income Statement Balance Sheet > 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. Income Statement Statement of Changes Balance Sheet Cash Flows Prepare the balance sheet for Year 1. (Enter amounts to be deducted with a minus sign.) Assets JOVA COMPANY Balance Sheet As of December 31, Year 1 Total assets Liabilities Stockholders' Equity $ 0 Total stockholders' equity 0 Total liabilities and stockholders' equity $ 0 < Statement of Changes Cash Flows > 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. Income Statement Statement of Balance Sheet Cash Flows Changes Prepare the statement of cash flows for Year 1. (Enter cash outflows with a minus sign.) JOVA COMPANY Statement of Cash Flows For the Year Ended December 31, Year 1 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 < Balance Sheet $ 0 $ Cash Flows > 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. Income Statement Statement of Balance Sheet Cash Flows Changes Prepare the income statement for Year 2. JOVA COMPANY Income Statement For the Year Ended Year 2 Expenses Total expenses < Income Statement $ Statement 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. Income Statement Statement of Balance Sheet Cash Flows Changes 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 Total Stockholders' Equity $ 0 0 $ 0 Income Statement Balance Sheet > 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. Income Statement of Balance Sheet Cash Flows Changes Statement Prepare the balance sheet for Year 2. (Enter amounts to be deducted with a minus sign.) JOVA COMPANY Balance Sheet As of December 31, Year 2 Assets Total assets Liabilities Stockholders' Equity 0 $ 0 Total stockholders' equity 0 Total liabilities and stockholders' equity $ 0 < Statement of Changes Cash Flows > d-2. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year Statement of Changes Complete this question by entering your answers in the tabs below. Income Statement Statement of Balance Sheet Cash Flows Changes Prepare the statement of cash flows for Year 2. (Enter cash outflows with a minus sign.) JOVA COMPANY Statement of Cash Flows For the Year Ended December 31, 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 < Balance Sheet $ 0 0 $ 0 Cash Flows > e-1. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 1. Complete this question by entering your answers in the tabs below. Closing Entries T Accounts Trial Balance Prepare closing entries for Year 1. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet > A B Prepare the entry to close the revenue accounts. Note: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal Closing Entries T Accounts > e-1. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 1. Complete this question by entering your answers in the tabs below. Closing Entries T Accounts Trial Balance Prepare the T-accounts for Year 1. Balance Before Closing Ending Balance Balance Before Closing Cash Accounts Receivable Balance Before Closing Ending Balance Common Stock Allowance For Doubtful Accounts Balance Before Closing Ending Balance Ending Balance Retained Earnings Service Revenue Balance Before Closing Balance Before Closing Ending Balance Ending Balance Operating Expenses Uncollectible Accounts Expense Balance Before Closing Balance Before Closing Ending Balance Ending Balance < Closing Entries Trial Balance > e-1. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 1. Complete this question by entering your answers in the tabs below. Closing Entries T Accounts Trial Balance Prepare a post-closing trial balance for Year 1. JOVA COMPANY Post Closing Trial Balance December 31, Year 1 Account Titles Total $ Debit Credit $ 0 < T Accounts Trial Balance > e-2. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 2. Complete this question by entering your answers in the tabs below. Closing Entries T Accounts Trial Balance Prepare closing entries for Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet A B Prepare the entry to close the revenue accounts. Note: Enter debits before credits. Event 1 General Journal Debit Credit Clear entry Record entry View general journal < Closing Entries T Accounts > e-2. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 2. Complete this question by entering your answers in the tabs below. Closing Entries T Accounts Trial Balance Prepare the T-accounts for Year 2. Balance Before Closing Ending Balance Balance Before Closing Cash Accounts Receivable Balance Before Closing Ending Balance Common Stock Allowance For Doubtful Accounts Balance Before Closing Ending Balance Ending Balance Retained Earnings Service Revenue Balance Before Closing Balance Before Closing Ending Balance Ending Balance Operating Expenses Uncollectible Accounts Expense Balance Before Closing Balance Before Closing Ending Balance Ending Balance < Closing Entries Trial Balance > e-2. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 2. Complete this question by entering your answers in the tabs below. Closing Entries T Accounts Trial Balance Prepare a post-closing trial balance for Year 2. JOVA COMPANY Post Closing Trial Balance December 31, Year 2 Account Titles Debit Credit Total $ 0 $ 0 < T Accounts Trial Balance