![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![### 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 $20,000 of common stock for cash.
2. Recognized $60,000 of service revenue earned on account.
3. Collected $54,000 from accounts receivable.
4. Paid operating expenses of $37,800.
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 $67,500 of service revenue on account.
2. Collected $62,000 from accounts receivable.
3. Determined that $800 of the accounts receivable were uncollectible and wrote them off.
4. Collected $300 of an account that had previously been written off.
5. Paid $47,500 cash for operating expenses.
6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 10 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.](https://content.bartleby.com/qna-images/question/b81d4122-bb6d-46cd-ad1d-b8abdf16fa37/ada560a2-898a-4e49-a4db-299c485220fc/eifjri_thumbnail.jpeg)
Transcribed Image Text:### 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 $20,000 of common stock for cash.
2. Recognized $60,000 of service revenue earned on account.
3. Collected $54,000 from accounts receivable.
4. Paid operating expenses of $37,800.
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 $67,500 of service revenue on account.
2. Collected $62,000 from accounts receivable.
3. Determined that $800 of the accounts receivable were uncollectible and wrote them off.
4. Collected $300 of an account that had previously been written off.
5. Paid $47,500 cash for operating expenses.
6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 10 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.
![# Jova Company Horizontal Statements Model
## Overview
This table represents the horizontal statements model for Jova Company, detailing changes across assets, liabilities, equity, revenues, expenses, net income, and cash flows over two years.
### Column Headers
- **Event No.**: Indicates the sequence of transactions or events.
- **Assets**: Changes in assets, denoted by "+" or "–".
- **Liabilities**: Changes in liabilities, including increases or decreases.
- **Equity**: Changes in equity, indicating alterations in ownership value.
- **Revenues**: Revenue changes that affect the income.
- **Expenses**: Changes in expenses, related to operational costs.
- **Net Income**: Effect on net income, indicating profit or loss dynamics.
- **Statement of Cash Flow**: Tracks cash flow activities:
- **FA**: Financing Activities
- **OA**: Operating Activities
- **IA**: Investing Activities (not shown)
### Detailed Explanation by Year
#### Year 1
1. **Event 1**:
- Assets increase.
- No change in liabilities or equity.
- Positive impact on revenues and net income.
- Financing activity (FA).
2. **Event 2**:
- Assets increase.
- No change in liabilities or equity.
- Positive impact on net income.
- Operating activity (OA).
3. **Event 3**:
- Assets fluctuate slightly.
- No change in liabilities or equity.
- Positive impact on net income.
- Operating activity (OA).
4. **Event 4**:
- Assets decrease.
- No change in liabilities.
- Equity increases.
- Positive impact on revenues and net income.
5. **Event 5**:
- Assets decrease.
- Liability increase.
- Negative net income effect.
- Operating activity (OA).
#### Year 2
1. **Event 1**:
- Assets increase.
- No change in liabilities or equity.
- Positive revenue effect.
- Operating activity (OA).
2. **Event 2**:
- Assets fluctuate.
- No change in liabilities.
- Positive net income impact.
- Operating activity (OA).
3. **Event 3**:
- Assets decrease.
- Liability increase.
- Negative cash flow effect](https://content.bartleby.com/qna-images/question/b81d4122-bb6d-46cd-ad1d-b8abdf16fa37/ada560a2-898a-4e49-a4db-299c485220fc/i0dbwh9_thumbnail.jpeg)
Transcribed Image Text:# Jova Company Horizontal Statements Model
## Overview
This table represents the horizontal statements model for Jova Company, detailing changes across assets, liabilities, equity, revenues, expenses, net income, and cash flows over two years.
### Column Headers
- **Event No.**: Indicates the sequence of transactions or events.
- **Assets**: Changes in assets, denoted by "+" or "–".
- **Liabilities**: Changes in liabilities, including increases or decreases.
- **Equity**: Changes in equity, indicating alterations in ownership value.
- **Revenues**: Revenue changes that affect the income.
- **Expenses**: Changes in expenses, related to operational costs.
- **Net Income**: Effect on net income, indicating profit or loss dynamics.
- **Statement of Cash Flow**: Tracks cash flow activities:
- **FA**: Financing Activities
- **OA**: Operating Activities
- **IA**: Investing Activities (not shown)
### Detailed Explanation by Year
#### Year 1
1. **Event 1**:
- Assets increase.
- No change in liabilities or equity.
- Positive impact on revenues and net income.
- Financing activity (FA).
2. **Event 2**:
- Assets increase.
- No change in liabilities or equity.
- Positive impact on net income.
- Operating activity (OA).
3. **Event 3**:
- Assets fluctuate slightly.
- No change in liabilities or equity.
- Positive impact on net income.
- Operating activity (OA).
4. **Event 4**:
- Assets decrease.
- No change in liabilities.
- Equity increases.
- Positive impact on revenues and net income.
5. **Event 5**:
- Assets decrease.
- Liability increase.
- Negative net income effect.
- Operating activity (OA).
#### Year 2
1. **Event 1**:
- Assets increase.
- No change in liabilities or equity.
- Positive revenue effect.
- Operating activity (OA).
2. **Event 2**:
- Assets fluctuate.
- No change in liabilities.
- Positive net income impact.
- Operating activity (OA).
3. **Event 3**:
- Assets decrease.
- Liability increase.
- Negative cash flow effect
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