Question

Hep Save & ERILSUDMIL Exercise 2-18 (Algo) Cash versus accrual accounting (LO2-9) Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $160,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded: $380,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow 186,000 31,000 15,000 12,000 26,000 270,000 $ 110,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 $38,000 Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses) December 31, 2021 $ 30,000 2,600 1.800 1.600 3,000 4,000 In addition, you learn that the bank loan was dated September 30, 2021, with principal and interest at 6% due in one year. Depreciation on the company's equipment is $16,000 for the year. Required: Prepare an accrual basis income statement for 2021 (Ignore income taxes.) STANLEY AND JONES LAWN SERVICE COMPANY Income Statement For the Year Ended December 31, 2021 SGD 0 .

Answer 1

Answoro * fic parte an accrual basis income statement for deals salos revenue = $380,000 – 8,000 = 380,000 -- 8,000 = 372.000 sepplies Expense = 31,000-$200 = $ 30.800 in sunance Opense = 12,000 - 2.600 : . = $9400 miscellaneous Expense = 26,000 +1000 = 27,000 interest Experise - principal Rate of interest x no. do you s = 160,000 X 60% X 3 = $2,400

maananen STANLEY AND JONES LAWN SERVICE COMPANY income slalement for the year funded Dec 31,0ml: Amount a Amount($) Revenues $312.000 $ 186.000 $30.800 sales vercruc Expenses: - salonise Expense supplics Eepense Rent insurance Expense miscellaneous Expeace. greciation operating income. other... Expence: $15,000 $ 9400 $27,000 $ 16000 (284,2003 87,800 interest 2,400 Inet income 85,400: