Question

Minutemen Law Services maintains its books using cash-basis accounting. However, the company decides to borrow $100,000 from a local bank, and the bank requires Minutemen to provide annual financial statements prepared using accrual basis accounting as part of the credit worthiness verification. During 2021, the company records the following cash flows: $62,000 eBook Cash collected from customers Cash paid for: Salaries Supplies Rent Insurance Utilities Net cash flows Print $35,200 3,200 4,200 6,280 2,200 $1,000 $11,000 ferences You are able to determine the following information: January 1, 2021 $20,200 AC nts Receivable Prepaid Insurance Supplies Salaries Payable December 31, 2021 $22,400 3,300 1.600 3.ee 4,200 2,300

Answer 1

Solution:

MINUTEMEN LAW SERVICES
Income statement
For the Year Ended December 31, 2021
Service Revenue:
Revenue [22400+62000-20200]		$         64,200
Total Revenue (A)		$         64,200
Expenses:
Salaries Expense [35200+3600-2300]	$           36,500
Supplies Expense [3200+4200-1600]	$             5,800
Rent Expenses	$             4,200
Insurance Expenses [6200-3300]	$             2,900
Utilities Expenses	$             2,200
Total Expense (B)		$         51,600
Net Income (A-B)		$         12,600