Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lopez Accessories maintains its books using cash-basis accounting. However, the company recently borrowed $50,000 from a local bank and the bank requires Lopez to provide

Lopez Accessories maintains its books using cash-basis accounting. However, the company recently borrowed $50,000 from a local bank and the bank requires Lopez to provide annual financial statements prepared using accrual-basis accounting as part of the credit worthiness verification. During 2021, the following cash flows were recorded:

Cash collected from customers $60,000

Cash paid for:

Salaries $25,000

Supplies 6,000

Maintenance 5,000

Insurance 7,000

Advertising. 4,000

47,000

Cash-basis profit $13,000

You are able to determine the following information:

January 1, 2021

January1,2021. December 31, 2021

Accounts receivable. $15,000 $18,000

Prepaid insurance 1,800 4,100

Supplies 800 -0-

Salaries payable 2,200 2,000

Required:

what is accrual-basis income statement for December 31, 2021, by calculating accrual-basis revenues and expenses.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Governmental And Nonprofit Entities

Authors: Jacqueline Reck, Suzanne Lowensohn, Daniel Neely

19th Edition

1260118851, 9781260118858

More Books

Students also viewed these Accounting questions

Question

What is a channel of distribution? What are channel intermediaries?

Answered: 1 week ago

Question

8. What values do you want others to associate you with?

Answered: 1 week ago