E3-17A. (Learning Objective 1: Linking accrual accounting and cash flows) During 20X7, Milky Way Corporation made sales of $4,600 (assume all on account) and collected cash of

$4,800 from customers. Operating expenses totaled $1,100, all paid in cash. At year-end, 20X7, Milky Way customers owed the company $500. Milky Way owed creditors $1,200 on account.

All amounts are in thousands.

1. For these facts, show what Milky Way reported on the following financial statements:

a. Income Statement

b. Balance Sheet 2. Suppose Milky Way had used the cash basis of accounting. What would Milky Way have reported for these facts?