Nalezny Corp. maintains its financial records on the cash basis of accounting.

Interested in securing a long-term loan from its regular bank, Nalezny Corp. requests you to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2014, 2015, and 2016.

Instructions

(a) Using the data above, prepare abbreviated income statements for the years 2014 and 2015 on the cash basis.

(b) Using the data above, prepare abbreviated income statements for the years 2014 and 2015 on the accrual basis.

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2014 2015 2016 Cash receipts from sales: On 2014 sales $290,000 $160,000 $ 30,000 On 2015 sales -0- 355,000 On 2016 sales 90,000 408,000 Cash payments for expenses: On 2014 expenses 185,000 67,000 25,000 On 2015 expenses 40,000 170,000 55,000 On 2016 expenses 45,000 218,000 "Prepayments of 2015 expenses. Prepayments of 2016 expenses.