Problem Cash Flow Income vs. Accrual (GAAP) Income. ABC Corporation is a new company. It determines net income using a cash basis method. Its income statement for the first period appears below: ABC Corporation Income Statement (Cash Basis) Revenue $ 25,000 Expenses Supplies $ (2,000) Equipment $ (12,000) Salaries $ (4,000) Net Income $ 7,000

You determine the following:

(1) $7,000 of the revenues represent advance payments for work not completed by ABC.

(2) Supplies on hand as of the end of the period amount to $1,500.

(3) The equipment has an expected life of 5 years, and an expected salvage value of $2,000.

Required: Using EXCEL, prepare and submit a new income statement applying the accrual income (GAAP) principles.