Effect of collecting accounts receivable on the accounting equation and financial statements
Schroder Company earned $14,000 of service revenue on account during 2012. The company collected $11,500 cash from accounts receivable during 2012.
Based on this information alone, determine the following. (Hint: Record the events in general ledger accounts under an accounting equation before satisfying the requirements.)
a. The balance of the accounts receivable that Schroder would report on the December 31, 2012, balance sheet.
b. The amount of net income that Schroder would report on the 2012 income statement.
c. The amount of net cash flow from operating activities that Schroder would report on the 2012 statement of cash flows.
d. The amount of retained earnings that Schroder would report on the 2012 balance sheet.
e. Why are the answers to Requirements b and c different?