Majestic Caterers was founded in September 2014 by Barbara Roberts and Lisa Grotto as a catering service in central Arizona. Majestic broke even for the year ended December 31, 2014; however, in 2015, the company experienced a high growth rate. Roberts and Grotto would like to expand their catering enterprise to include a restaurant. Roberts applied for an expansion loan at the local bank, and the bank has requested audited financial statements prepared on the accrual basis. Prior to this loan application, Majestics financial records have been kept on a cash basis in order to accurately reflect Majestics priority of cash flow. Roberts and Grotto hired the services of an independent accountant, Paul Maynard, to assist them in converting Majestics 2015 financial statements, prepared on the cash basis, to 2015 accrual basis. From a review of the companys records and files, as well as discussions with Roberts and Grotto, Maynard has gathered the following data concerning Majestics transactions during 2015 and the cash basis financial statements. In addition, the companys Statement of Financial Position at December 31, 2014, has been restated to an accrual basis as presented in the next page.

Summary of Cash Transactions for 2015 Receipts
Cash sales	$646,000
Collections from customers	610,000
Proceeds from one-year, 6% note,
Received July 1, 2015	80,000
Disbursements:
Payments for supplies	216,600
Wages paid to employees	248,000
Payments to the utility company	44,000
Insurance premiums paid	36,000
Rent paid to landlord	72,000
Equipment purchased on January 1, 2015	100,000

- Uncollected customers bills totaled $139,600 at December 31, 2015

- On July 1, 2015, a supplier of Majestic advanced the company $80,000 on a one-year, six percent note payable with semi-annual interest payments to be made on January 1, 2016, and at maturity on July 1, 2016.

- Unpaid bills to suppliers totaled $22,400 at December 31, 2015.

- Supplies costing $16,000 were on hand at December 31, 2015.

- Wages owed to employees at December 31, 2015 were $11,200.

- The December utility bill of $3,900 was unpaid at December 31, 2015.

- The insurance premium was paid for a one-year liability and property damage policy effective February 1, 2015. A review of the insurance policies revealed that there was $2,500 prepaid insurance remaining on December 31, 2015.

- The rent of $6,000 per month was paid to the landlord on the first of every month.

- Maynard recommends depreciating the companys equipment, which was purchased January 1, 2015, for $100,000, over its useful life of ten years using the straight-line method of depreciation. The equipment has no estimated residual value. (In its first year of operation, 2014, Majestic leased equipment.)

- Majestic has an effective income tax rate of 40 percent. There were no differences between financial reporting and income tax reporting for the year ended December 31, 2014. No taxes were paid in 2015.

Majestic Caterers Balance Sheet As of December 31, 2014 Assets
Cash	$51,200
Accounts receivable - Catering	48,800
Supplies Inventory	48,000
Prepaid Insurance	4000
Total Assets	$152,000
Liabilities and shareholders' equity
Accounts payable -- supplies	$56,000
Common stock	96,000
Total liabilities and shareholders' equity	$152,000

Required:

Using the accrual basis, prepare Majestic Caterers Income Statement and Balance Sheet for the year ended December 31, 2015.