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 2012, the company records the following cash flows:
Cash collected from customers .....................................$60,000
Cash paid for:
Salaries ................................$35,000
Supplies .................................3,000
Rent .....................................4,000
Insurance ...............................6,000
Utilities .................................2,000 .......................50,000
Net cash flows ......................................................$10,000
You are able to determine the following information:
................................................January 1, 2012 ...............December 31, 2012
Accounts Receivable .......................$20,000 ...............................$22,000
Prepaid Insurance ..............................-0- ....................................3,200
Supplies .......................................4,000 ..................................1,500
Salaries Payable ..............................2,200 ..................................3,400
In addition, depreciation on the company's equipment is $8,000 for the year.
Required:
Prepare an accrual-basis income statement for the year ended December 31, 2012? (Ignore income taxes.)