The Containers Inc. experienced the following events during its first year of operations, Year 1:
1. Acquired $42,000 cash by issuing common stock.
2. Earned $25,000 revenue on account.
3. Paid $18,000 cash for operating expenses.
4. Borrowed $10,000 cash from a bank.
5. Collected $22,000 of the balance in accounts receivable.
6. Paid a $1,000 cash dividend.

Required
Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example.

a. Would the accounts receivable account appear in the assets, liabilities, or stockholders’ equity section of the December 31, Year 1, balance sheet?
b. Determine the balance of the accounts receivable account that would appear on the December 31, Year 1, balance sheet.
c. Determine the amount of net income that would appear in the Year 1 income statement.
d. Determine the amount of the cash flow from operating activities that would appear in the Year 1 statement of cash flows.
e. Explain why the amount determined in Requirement c differs from the amount determined in Requirement d.

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Balance Sheet Income Statement Assets Liab. Statement of Cash Flows Stk. Equlty Accts. Rec. = Notes Pay. + Com. Stk. + Ret. Earn. Event Exp. = Net Inc. Cash Rev. - 1. 42,000 + NA NA 42,000 NA NA NA NA 42,000 FA