stanley and jones lawn service company s j maintains its books on a cash basis 453717
Aug 29, 2021 | Uncategorized
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Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $170,000 from a local bank and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2013, the following cash flows were recorded:
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| Cash collected from customers |
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$ |
390,000 |
| Cash paid for: |
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| Salaries |
$ |
187,000 |
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| Supplies |
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32,000 |
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| Rent |
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16,000 |
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| Insurance |
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6,000 |
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| Miscellaneous |
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27,000 |
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268,000 |
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| Net operating cash flow |
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$ |
122,000 |
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You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities:
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January 1, 2013 |
December 31, 2013 |
| Accounts receivable |
$ |
39,000 |
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$ |
30,500 |
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| Prepaid insurance |
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0 |
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2,700 |
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| Supplies |
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1,700 |
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1,850 |
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Accrued liabilities
(for miscellaneous expenses) |
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3,100 |
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4,200 |
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In addition, you learn that the bank loan was dated September 30, 2013, with principal and interest at 6% due in one year. Depreciation on the company’s equipment is $17,000 for the year.
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| Required: |
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Prepare an accrual basis income statement for 2013. (Ignore income taxes.)
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