Effect of collecting accounts receivable on the accounting equation and financial statements
Solimon Company earned $13,000 of revenue on account during 2011. The Company collected $7,000 cash from accounts receivable during 2011.
Required
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 accounts receivable that Solimon would report on the December 31, 2011, balance sheet.
b. The amount of net income that Solimon would report on the 2011 income statement.
c. The amount of net cash flow from operating activities that Solimon would report on the 2011 statement of cash flows.
d. The amount of retained earnings that Solimon would report on the December 31, 2011, balance sheet.
e. Why are the answers to Requirements b and c different?
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