Exercise 2-18 (Algo) Cash versus accrual accounting (LO2-9) Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $270,000 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: $490,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies $ 197,000 42,000 26,000 9,000 37,000 Insurance Miscellaneous Net operating cash flow 311,000 $179,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 $ 38,000 Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses) December 31, 2021 $30,000 3,700 3.400 2,700 4,100 6, 200 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 $16,000 for the year. Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.) STANLEY AND JONES LAWN SERVICE COMPANY Check my work 2,700 3.400 Supplies Accrued liabilities for miscellaneous expenses) 4.100 6,200 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 $16,000 for the year. Required: Prepare an accrual basis income statement for 2021. (gnore income taxes.) STANLEY AND JONES LAWN SERVICE COMPANY Income Statement For the Year Ended December 31, 2021 Operating expenses: Total operating expenses Operating income Other expense: Not income Prev 1 of 5 !!! Next >