Holloway Company earned $18,000 of service revenue on account during 2016. The company collected $14,000 cash from accounts receivable during 2016.
Based on this information alone, determine the following for Holloway Company.
a. The balance of the accounts receivable that would be reported on the December 31, 2016, balance sheet.
b. The amount of net income that would be reported on the 2016 income statement.
c. The amount of net cash flow from operating activities that would be reported on the 2016 statement of cash flows.
d. The amount of retained earnings that would be reported on the 2016 balance sheet.
e. Why are the answers to Requirements b and c different?