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 $190,000 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				$	410,000
Cash paid for:
Salaries	$	189,000
Supplies		34,000
Rent		18,000
Insurance		8,000
Miscellaneous		29,000			278,000
Net operating cash flow				$	132,000

You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities:

	January 1, 2021			December 31, 2021
Accounts receivable	$	30,000		$	26,000
Prepaid insurance		0			2,900
Supplies		1,900			3,000
Accrued liabilities (for miscellaneous expenses)		3,300			4,600

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 companys equipment is $19,000 for the year. Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.)