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Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $120,000 from a local bank, and

Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $120,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded:

Cash collected for: Services to customers $ 340,000
Cash paid for:
Salaries $ 182,000
Supplies 27,000
Rent 11,000
Insurance 8,000
Miscellaneous 22,000 250,000
Net operating cash flow $ 90,000

You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities:

January 1, 2021 December 31, 2021
Accounts receivable $ 34,000 $ 28,000
Prepaid insurance 0 2,200
Supplies 1,200 1,600
Accrued liabilities (for miscellaneous expenses) 2,600 3,200

In addition, you learn that the bank loan was dated September 30, 2021, with principal and interest at 6% due in one year. Depreciation on the companys equipment is $12,000 for the year. Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.)

STANLEY AND JONES LAWN SERVICE COMPANY
Income Statement
For the Year Ended December 31, 2021
Sales revenue
Operating expenses:
Salaries expense
Supplies expense
Rent expense
Insurance expense
Miscellaneous expense
Depreciation expense
Total operating expenses
Operating income
Other expense:
Interest expense
Net income

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