We actually SEE Ross and Monica’s grandmother die in season one, in the hospital. There’s a whole plot written about it, actually — Nana dying “twice.” So their grandmother was never actually “found” dead, as Judy says here. She passed away (somewhat) peacefully at the hospital.
“Well, what about their other grandma?”
We know for a fact that their other grandmother is alive. During season 7, when Monica is walking down the aisle at her wedding, this exchange occurs:
Judy: "I wish your grandmother had lived to see this."
Monica: "She's right there." (pointing to her paternal grandmother, who is sitting in the audience)
Judy: "Not that old crow. My mother."
Tsk, tsk, tsk.
Disclaimer: I am well aware this is a sitcom and, especially back in the day, writers were far less concerned with continuity as opposed to landing a good joke. I am not criticizing the show whatsoever by pointing this out, it’s simply something I noticed. So please don’t flood the comments trying to somehow “justify” this quote or attempting to make it make sense. It’s a tiny continuity error. There’s no need to bend over backwards making it fit.
Edit: Annnnnnnd people are doing exactly that ^ anyway. Can’t stop themselves, can they? The human brain just NEEDS it to make sense. It’s fascinating, honestly.