Exercise 2 - Accrual vs. cash accounting: Sabon Corporation sells beauty products. The company's fiscal year ends on December 31. The following transactions occurred in 2017: Purchased $385,000 of soaps from its supplier. Paid $220,000 in cash and owed the rest on account. Paid S164,000 in wages to employees for work performed in 2017. In addition, S14,000 of wages for work performed in 2016 were paid in January 2017, and $23,000 of wages for work performed in December 2017 will be paid in January 2018. Sold S770,000 of soaps in 2017. One-fourth of the amount was paid in cash and the rest is owed to the company and will be paid in 2018. The cost of goods sold is $370,000. Paid S25,000 in cash for utilities expense in 2017 Sabon Corp. received a deposit from a customer at the amount of $89,000 in cash in December 2017. The actual sale will occur in 2018. Sabon Inc. received a S350 utility bill for December 2017The bill was paid in 2018. a. b. c. d. e. Required: Complete the following cash-based and accrual-based income statements. Cash-basis income statement Revenues Cash sales Customer deposits Total revenues Expenses Inventory purchases Wages paid Utilities paid Total expenses: Net Loss Revenues Sales to customers Total revenues Expenses Cost of sales Wage expense Utilities expense Total expenses: Net Income