Krisha Co. began operations on January 1, 2020. During the year ended December 31, 2021, the accounting records have been maintained on a double entry basis, but the cash basis of accounting has been employed.

The trial balance prepared from these records on December 31, 2021 appeared as follows:

CASH 1,500,000.00

SALES 4,000,000.00

PURCHASES 2,000,000.00

EXPENSES 1,500,000.00

EQUIPMENT 200,000.00

SHARE CAPITAL 2,000,000.00

LAND 800,000.00

BULDING 1,500,000.00

MORTGAGE PAYABLE 900,000.00

RETAINED EARNINGS 600,000.00

TOTAL 7,500,000.00 7,500,000.00

The entity decided to convert the accounting records to the accrual basis on December 31, 2021.

Additional information:

1.Accounts Receivable

DECEMBER 31, 2020 200,000.00

DECEMBER 31, 2021 250,000.00

2.The sales of 2020 included P40,000 deposited by a customer for merchandise to be delivered 2021.

3.Accounts Payable

DECEMBER 31, 2020 350,000.00

DECEMBER 31, 2021 280,000.00

4.Accrued Expenses

DECEMBER 31, 2020 70,000.00

DECEMBER 31, 2021 100,000.00

5.Merchandise Inventory

DECEMBER 31, 2020 150,000.00

DECEMBER 31, 2021 210,000.00

6.The purchases included 100,000 cash advance to a supplier for merchandise to be delivered in 2022.

7.The equipment was acquired on July 1, 2020. The estimated economic life is 10 years.

8.The land and building were acquired on January 1,2020. The life of the building is five years.

9.It is estimated that 10% of the outstanding accounts receivable on December 31, 2021 may prove uncollectible.

10.The mortgage was on the land and building and was obtained on September 1, 2021. The interest rate is 12% per annum payable

December 31. The mortgage will mature after 4 years.

make an income statement under the accrual basis of accounting for the year ended December 31, 2021.