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The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $17,000 of common stock for cash. Recognized $217,000 of
The following transactions apply to Jova Company for Year 1, the first year of operation:
- Issued $17,000 of common stock for cash.
- Recognized $217,000 of service revenue earned on account.
- Collected $169,700 from accounts receivable.
- Paid $132,000 cash for operating expenses.
- 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:
- Recognized $327,000 of service revenue on account.
- Collected $342,000 from accounts receivable.
- Determined that $2,500 of the accounts receivable were uncollectible and wrote them off.
- Collected $1,500 of an account that had previously been written off.
- Paid $212,000 cash for operating expenses.
- 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.
e-1. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 1.
e-2. Prepare closing entries and post these closing entries to the T-accounts and prepare a post-closing trial balance for Year 2.
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