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34 (40 points) Terry Corporation started operations in 2020. The following information presents the cash flows associated with collections from its sole customer, Sanders Company,
34 (40 points) Terry Corporation started operations in 2020. The following information presents the cash flows associated with collections from its sole customer, Sanders Company, for each of the years 2021 and 2022, as well as amounts owed from Sanders Company and amounts owed to employees and vendors as of the end of each period. In addition to this information, the insurance payment of $49,500 in 2021 covers insurance for the three-year period, 2021-2023. Cash collected from Sanders Company Amounts paid for: Salaries Insurance Utilities 2020 2022 725,000 2021 685,000 592,000 611,500 49,500 0 79,800 96,100 Ending balances in: Accounts 136,200 148,000 97,500 receivable Prepaid insurance 0 ? ? Salaries payable 0 0 0 Utilities payable 15,900 9,700 13,400 Required: 1. Prepare income statements on the cash basis of accounting for 2021 and 2022 (use grid below). 2. Prepare income statements on the accrual basis of accounting for 2021 and 2022 (use grid below). 3. Show t-accounts for accounts receivable, prepaid insurance, and utilities payable from January 1, 2021 through December 31, 2022 (two years) including balances at the end of each year (use work space on the next page for this). Cash Method #1 2021 2022 Service revenue Expenses: Salaries Insurance Utilities Net income (loss) Accrual Method #2 2021 2022
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