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 $160,000 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: $380,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $186,000 31,000 15,000 12,000 26,000 270,000 $110,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 December 31, 2021 Accounts receivable $38.000 $30,000 Prepaid insurance 2,600 Supplies Accrued liabilities (for miscellaneous expenses) 3,000 4,000 1,800 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. In addition, you learn that the bank loan was dated September 30, 2021, with 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 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: Interest expense Net income