Follettes Accessories maintains its books using cash-basis accounting. However, the company recently borrowed $50,000 from a local

Follette’s Accessories maintains its books using cash-basis accounting. However, the company recently borrowed $50,000 from a local bank and the bank requires Follette’s to provide annual financial statements prepared using accrual-basis accounting as part of the credit worthiness verification. During 2015, the following cash flows were recorded:

You are able to determine the following information:

Required:
Prepare an accrual-basis income statement for December 31, 2015, by calculating accrual-basis revenues andexpenses.

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Cash collected from customers S60,000 Cash paid for: Salaries Supplies Maintenance Insurance Advertising 25,000 6,000 5,000 7,000 4,00013 000 47,000 Net cash flows January 1, 2015 December 31, 2015 $15,000 1.800 800 2.200 S18,000 4,100 Accounts receivable Prepaid insurance Supplies Salaries payable 2,000