Smith Company earned $12,000 of service revenue on account during Year 1. The company collected $9,800 cash

Question:

Smith Company earned $12,000 of service revenue on account during Year 1. The company collected $9,800 cash from accounts receivable during Year 1.

Required
Based on this information alone, determine the following for Smith Company.
a. The balance of the accounts receivable that Smith would report on the December 31, Year 1, balance sheet.
b. The amount of net income that Smith would report on the Year 1 income statement.
c. The amount of net cash flow from operating activities that would be reported on the Year 1 statement of cash flows.
d. The amount of retained earnings that would be reported on the Year 1 balance sheet.
e. Why are the answers to Requirements b and c different?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...

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