Answer:
Based on given information alone the answers are:
a. $4,000 as balance of the accounts receivable will be reported on the December 31, Year 1, balance sheet.
b. Net income of $18,000 that will be reported on the Year 1 income statement.
c. Net cash flow of $14,000 from operating activities will be reported on the Year 1 statement of cash flows.
d. Retained earnings of $18,000 will be reported on the Year 1 balance sheet.
Explanation:
a.
Service revenue on account during Year 1 = $18,000
Cash from accounts receivable during Year 1 = $14,000
Balance of the accounts receivable on December 31, Year 1 = $18,000-$14,000 = $4,000
b. Only $18,000 service revenue earned in year 1 will be reported in the income statement
c. Only one cash transaction of $14,000 received from customer during the year is given in the question, so it will be reported on the Year 1 statement of cash flows.
d. Retained earnings that would be reported on the Year 1 balance sheet is $18,000
a. Accounts receivable $4,000
b. Net income $18,000
c. Net cash flow from operating activities $14,000
d. Retained earnings $18,000
a. Accounts receivable reported on the balance sheet is calculated using this formula
Accounts receivable=Service revenue-Cash
Let plug in the formula
Accounts receivable=$18,000-$14,000
Accounts receivable=$4,000
b. Net income reported is:
.• Service revenue on account of the amount of $18,000
c. Net cash flow from operating activities reported is :
•Cash from accounts receivable during year 1 of the amount of $14,000
d. Retained earnings reported is:
• $18,000 which represent the Net income amount that will be move to retained earnings account.
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