Latta Corp. maintains its financial records on the cash basis of accounting. Interested in securing a long-term loan from its regular bank, Latta Corp. requests you as its independent CPA to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2011, 2012, and 2013.

Instructions(a) Using the data above, prepare abbreviated income statements for the years 2011 and 2012 on the cash basis.(b) Using the data above, prepare abbreviated income statements for the years 2011 and 2012 on the accrualbasis.

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2011 2012 2013 Cash receipts from sales: On 2011 sales On 2012 sales On 2013 sales Cash payments for expenses: On 2011 expenses On 2012 expenses On 2013 expenses Prepayments of 2012 expenses. bprepayments of 2013 expenses. $290,000 $ 30,000 90,000 $160,000 355,000 -0- 408,000 185,000 40,000* 25,000 55,000 218,000 67,000 170,000 45,000b