Prepare an accrual basis income statement

Reference no: EM132448138

Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements.

The following cash flows occurred during the year ended December 31, 2021:

Cash receipts: From customers$720,000Interest on note4,720Loan from a local bank80,000Total cash receipts$804,720

Cash disbursements: Purchase of merchandise$399,000Annual insurance payment7,080Payment of salaries219,000 Dividends paid to shareholders10,000Annual rent payment28,500Total cash disbursements$663,580

Selected balance sheet information:

12/31/202012/31/2021Cash$29,500$170,640Accounts receivable66,500101,000Inventory89,00066,500Prepaid insurance3,400?Prepaid rent11,900?Interest receivable3,540?Note receivable59,00059,000Equipment145,000145,000Accumulated depreciation(44,500)(59,000)Accounts payable (for merchandise)114,500131,000Salaries payable20,90025,800Notes payable080,000

Interest payable0?

Additional information:

On March 31, 2020, Zambrano lent a customer $59,000. Interest at 8% is payable annually on each March 31. Principal is due in 2024.

The annual insurance payment is paid in advance on April 30. The policy period begins on May 1.

On October 31, 2021, Zambrano borrowed $80,000 from a local bank and signed a note promising repayment. Principal and interest at 6% are due on October 31, 2022.

Annual rent on the company's facilities is paid in advance on June 30. The rental period begins on July 1.

Required:

1. Prepare an accrual basis income statement for 2021 (ignore income taxes).
2. Determine the following balance sheet amounts on December 31, 2021

Reference no: EM132448138

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