Additional information:

On March 31, 2017, Zambrano lent a customer $55,000. Interest at 8% is payable annually on each March 31. Principal is due in 2021.

The annual insurance payment is paid in advance on April 30. The policy period begins on May 1.

On October 31, 2018, Zambrano borrowed $125,000 from a local bank. Principal and interest at 6% are due on October 31, 2019.

Annual rent on the companys facilities is paid in advance on June 30. The rental period begins on July 1.

Required:

1. Prepare an accrual basis income statement for 2018 (ignore income taxes). (Other expenses should be indicated with a minus sign.)

2. Determine the following balance sheet amounts on December 31, 2018:

Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2018 Cash receipts From customers Interest on note Loan from a local bank $700,000 4,400 125,000 Total cash receipts $829,400 Cash disbursements: Purchase of merchandise Annual insurance payment Payment of salaries and wages Dividends paid to shareholders Annual rent payment $395,000 6,600 215,000 12,000 26,500 $655,100 Total cash disbursements Selected balance sheet information 12/31/17 12/31/18 27,500 201,800 97,000 64,500 Cash Accounts receivable Inventory Prepaid insurance Prepaid rent Interest receivable Note receivable Equipment Accumulated depreciation-equipment Accounts payable (for merchandise) Salaries and wages payable 64,500 85,000 3,000 11,500 3,300 55,000 125,000 55,000 125,000 (42,500) (55,000) 112,500 20,500 127,000 25,000 125,000 Notes payable Interest payable