(Cash and Accrual Basis) Wayne Rogers Corp. maintains its financial records on the cash basis of accounting. Interested in securing a long-term loan from its regular bank, Wayne Rogers Corp. requests you as its independent CPA to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2003, 2004, and 2005.

Instructions

(a) Using the data above, prepare abbreviated income statements for the years 2003 and 2004 on the cash basis.

(b) Using the data above, prepare abbreviated income statements for the years 2003 and 2004 on the accrual basis.

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2003 2004 2005 Cash receipts from sales: On 2003 sales $295,000 $160,000 $30,000 On 2004 sales -0- 355,000 90,000 On 2005 sales 408,000 Cash payments for expenses: On 2003 expenses 185,000 67,000 25,000 On 2004 expenses 40,000 160,000 55,000 On 2005 expenses 45,000 218,000 aPrepayments of 2004 expenses. "Prepayments of 2005 expenses.