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Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $130,000 from a local bank,
Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $130,000 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 Cash paid for: $183,000 Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $350,000 28,000 12,000 9,000 23,000 255,000 $ 95,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses) January 1, 2021 $35,000 0 1,300 2,700 December 31, 2021 $28,500 2,300 1,650 3,400 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 company's equipment is $13,000 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 Operating expenses: Total operating expenses Operating income Other expense: Net income
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