Julio Estela started a small boat repair service company during the current year. He is interested in obtaining a $100,000 loan from your bank to build a dry dock to store boats for customers in the winter months. At the end of the year, he prepared the following statements based on information stored in a large filing cabinet: $ 55,000 10,000 65,000 $ 22,000 500 1,000 3,200 ESTELA COMPANY Profit for the Current Year Service fees collected in cash during the current year Cash dividends received Total Expense for operations paid during the current year Cash stolen New tools purchased during the current year (cash paid) Supplies purchased for use on service jobs (cash paid) Total Profit Assets Owned at the End of the Current Year Cash in checking account Building (at current market value) Tools and equipment Land (at current market value) Stock in ABC Industrial Total 26,700 38,300 $ $ 29,309 32,000 18,000 30,000 130,000 $ 239,300 The following is a summary of completed transactions: a. Received the following contributions (at fair value) to the business from the owner when it was started in exchange for 1,000 shares of $1 par value common stock in the new company: Building Tools and equipment $21,000 17,000 Land Cash $20,000 1,000 b. Earned service fees during the current year of $87,000; of the cash collected, $20,000 was for deposits from customers on work to be done by Julio in the next year. c. Received the cash dividends on shares of ABC Industrial stock purchased by Julio Estela six years earlier (the stock was not owned by the company). d. Incurred operating expenses during the current year of $61,000. e. Determined amount of supplies on hand (unused) at the end of the current year as $700. Required: 1. On what basis did Julio prepare the income statement? 2. Reconstruct the correct entries under accrual accounting principles and post the effects to T-accounts. 3. Prepare an accrual-based income statement, statement of stockholder's equity (only one shareholder), and a classified balance sheet. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2a Req 2b Reg Reg 3b Req 30 On what basis did Julio prepare the income statement?