Question

4 Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $240,000 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: 3 $460,000 points Cash collected for Services to customers Cash paid for Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $199,000 39,000 23,000 6.000 34,000 eBook Hint 296.000 $164,000 Print References You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 $35,000 2,400 December 31, 2021 $28.500 3.400 3,250 Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses 3,800 5,600 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 $13,000 for the year Required: Prepare an accrual basis Income statement for 2021. (ignore income taxes.)

Answer 1

Accrua basis Income Statement- Stanley and Jones Lawn Services Company
Revenue
Service Revenue (460000+28500-35000)		$453,500.00
Operating Expenses
Salaries Expenses	$194,000.00
Supplies (39000+2400-3250)	$38,150.00
Rent Expenses	$23,000.00
Insurance (6000-3400)	$2,600.00
Misc Expense (34000+5600-3800)	$35,800.00
Depreciation	$13,000.00
Total Operating Expenses		$306,550.00
Operating Income		$146,950.00
Other Expense:
Interest Expenses(240000*6%*3/12)		$3,600.00
Net Income		$143,350.00