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 $250,000 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: $ 470,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $195,000 40,000 24,000 7,000 35,000 301,000 $ 169,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses) January 1, 2021 $36,000 0 2,500 December 31, 2021 $ 29,000 3,500 3,300 3,900 5,800 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 $14,000 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 0 0 Total operating expenses Operating income Other expense: Interest expense Net income $ 0