P1.5 Art Angel operated a small seasonal lake marina, renting boats and selling snacks. He rents marina space for four months in Year 2004, from May 15 to September 15, for $800 per month. He started the current season with $15,000 in the bank and paid the marina seasonal rent in advance. In May, he bought three new boats for cash at $12,500 each and borrowed $25,000 at 6 percent interest. The new boats are estimated to have a 10-season life and a residual (trade-in) value of $2,500 each.

Straight-line depreciation will be used.

Purchase invoices show he paid $7,458 cash for food and beverage inventory. One unpaid invoice for food in the amount of $73 remains unpaid. No food or beverage inventory remained at season end. Other costs incurred during the season were boat maintenance, $1,211, and casual labor costs, $1,440. He paid the interest for the year based on the amount of the loan outstanding on May 15 and repaid $10,000 of the loan. In addition, Art said he withdrew $2,000 per month during the season. The season-ending cash balance in the bank is $14,697. No records exist regarding the amount of cash sales.

Cash sales revenue must be determined using only the information already noted. Show him how you determine the unknown cash sales and prepare an accrual income statement to show him operating income before tax for the year