Question

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 $14,000 of common stock for cash. 2. Recognized $69,000 of service revenue earned on account. 3. Collected $61,200 from accounts receivable. 4. Paid operating expenses of $35,700. 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 $76,500 of service revenue on account. 2. Collected $69,200 from accounts receivable. 3. Determined that $980 of the accounts receivable were uncollectible and wrote them off. 4. Collected $300 of an account that had previously been written off. 5. Paid $49,300 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 . a. Identify the type of each transaction (asset source, asset use, asset exchange, or claims exchange).

Answer 1

The transactions for Jova Company involve different types such as asset source, asset use, asset exchange, and claims exchange, which reflect various financial activities. For Year 1, issuing stock is an asset source example. A self-check question's answer calculates accounting profit by subtracting expenses from sales revenue to get $50,000.

Step-by-step explanation:

The question relates to identifying the type of transactions for Jova Company for Year 1 and Year 2, and this falls under the category of business and more specifically, financial accounting. The transactions can be classified as asset source, asset use, asset exchange, or claims exchange, which are fundamental concepts in accounting representing how each transaction affects the company's financial statements. For instance, the issuance of $14,000 in common stock for cash in Year 1 is an asset source transaction as it increases both the assets (cash) and equity (common stock) of Jova Company.

When looking at the self-check question about accounting profit, this is calculated by subtracting explicit costs from total revenues. Given a sales revenue of $1 million and expenses on labor, capital, and materials amounting to $950,000, the accounting profit would be $50,000.