Prepare an accrual-basis income statement for the year

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Reference no: EM131814225

Minutemen Law Services maintains its books using cash-basis accounting. However, the company decides to borrow $100,000 from a local bank, and the bank requires Minutemen to provide annual financial statements prepared using accrual-basis accounting as part of the creditworthiness verification. During 2018, the company records the following cash flows:

Cash collected from customers       $ 70,000  
     Cash paid for:            
     Salaries $ 36,000        
     Supplies   4,000        
     Rent   5,000        
     Insurance   7,000        
     Utilities   3,000     55,000  
 

 

 

 

 

 

 

        Net cash flows       $ 15,000  
       

 

 

 


You are able to determine the following information:

  January 1, 2018   December 31, 2018  
  Accounts Receivable $21,000 $24,000
  Prepaid Insurance 0 3,700
  Supplies 5,000 2,000
  Salaries Payable 2,700 4,400

Required:

Prepare an accrual-basis income statement for the year ended December 31, 2018, by calculating accrual-basis revenues and expenses.

Reference no: EM131814225

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