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 $280,000 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: $500,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $198,000 43,000 27,000 10,000 38,000 316,000 $184,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 $39,000 December 31, 2021 $30, 500 3,800 3,450 Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses) 0 2,800 4,200 6,400 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 $17,000 for the year. Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.) Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.) 491,500 STANLEY AND JONES LAWN SERVICE COMPANY Income Statement For the Year Ended December 31, 2021 Sales revenue $ Operating expenses: Salaries expense Supplies expense Rent expense Insurance expense Miscellaneous expense Depreciation expense Total operating expenses Operating income Other expense: 491,500 Net income $ 491,500