B C D E F G Zodiac Company records all of their transactions on a cash basis. Below you will see the results of operations of Zodiac Company for the year ended 12/31/19. Zodiac Company Income Statement For the Year Ended December 31, 2019 Sales $ 252,000 Selling & Admin Expenses Salaries Expense $ 78,000 1 Rent Expense $ 45,000 2 Commission Expense $ 37,800 3 Equipment $ 30,000 4 Utilities Expense $ 29,000 5 Insurance Expense $ 6,000 6 Interest Expense $ 3,000 $ 228,800 17 Net Income $ 23,200 18 NS The company has been asked by the bank to submit financial statements in the accrual method of accounting. Use the income statement and the information provided below to make the adjustments necessary to change the income statement from the cash basis to the accrual basis of accounting. Required: 1. Prepare the journal entries that are necessary 2. Complete the revised Income Statement in accrual basis accounting. Sheet1 a. There are several customer accounts outstanding at year end. The total amount waiting to be collected is $25,000. Of that amount, $3,500 is expected to be uncollectible. 27 b. The company rents its parking garage for $5,000 per month. The tenant must pay be quarterly and pay in advance. The contract was signed on January 1, 2019 C. Sales personnel are paid a 10% commission. The commission is paid on the way the cash 29 is received for the sale. d. On May 1, Zodiac took out a loan to purchase new equipment. The loan was a 12 month loan for $30,000 at 12% interest. Interest payments are required to be paid quarterly. The first payment is due on August 1, 2019. 30 e. Salaries paid on January 4, 2020 included amounts earned in December 2019. The amount of the 2019 salaries was $12,500. Ignore payroll taxes. f. The electric bill for December's electric costs in the amount of $2,800 was paid January 32 10, 2020 8. Equipment of $30,000 was purchased on January 1, 2019. The expected life is five years, no salvage value. Assume straight-line depreciation a h. Zodiac Company purchased a liability insurance policy on July 1, 2019 for $6,000. The 34 insurance policy is paid in advance for the following year. The company's income tax rate is 40%. The company has made no prepayments. Sheet1