* E 2-18 Cash versus accrual accounting LO2-9 CHAPTER 2 Review of the Accounting Process 97 Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $100,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded: Cash collected for: Services to customers $320,000 Cash paid for: Salaries $180,000 Supplies 25,000 Rent 12,000 Insurance 6,000 Miscellaneous 20,000 243,000 Net operating cash flow $ 77,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 December 31, 2021 Accounts receivable $32,000 $27.000 Prepaid insurance -0- 2,000 Supplies 1.000 1,500 Accrued liabilities 2,400 3,400 (for miscellaneous expenses) In addition, you learn that the bank loan was dated September 30, 2021, with principal and interest at 6% due in one year. Depreciation on the company's equipment is $10,000 for the year. Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.) X