Holloway Company earned $18,000 of service revenue on account during Year 1. The company collected $14,000 cash from accounts receivable during Year 1.

Required

Based on this information alone, determine the following for Holloway Company. (Hint: Record the events in general ledger accounts under an accounting equation before satisfying the requirements.)

a. The balance of the accounts receivable that would be reported on the December 31, Year 1, balance sheet.

b. The amount of net income that would be reported 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?