Answer:
Based solely on the provided information, the answers are:
a. The accounts receivable balance reported on the December 31, Year 1, balance sheet will be $4,000.
b. A net income of $18,000 will be recorded on the Year 1 income statement.
c. A net cash flow of $14,000 from operational activities will be shown on the Year 1 cash flow statement.
d. Retained earnings amounting to $18,000 will appear on the Year 1 balance sheet.
Explanation:
a.
Service revenue recorded on account for Year 1 totaled $18,000
Cash collected from accounts receivable during Year 1 amounted to $14,000
Thus, on December 31, Year 1, the accounts receivable balance stands at $18,000-$14,000 = $4,000
b. Only the $18,000 service revenue earned within Year 1 will be reported on the income statement.
c. The cash transaction recorded for the year sums to $14,000 received from customers, which is reflected in the Year 1 cash flow statement.
d. The retained earnings indicated on the Year 1 balance sheet amount to $18,000
