Several years ago, your brother opened Ready Appliance Repairs. He made a small initial investment and added money from his personal bank account as needed. He withdrew money for living expenses at irregular intervals. As the business grew, he hired an assistant. He is now considering adding more employees, purchasing additional service trucks, and purchasing the building he now rents. To secure funds for the expansion, your brother submitted a loan application to the bank and included the most recent financial statements (shown below) prepared from accounts maintained by a part-time bookkeeper.

READY APLIANCE REPAIRS
Balance Sheet
March 31, 20Y6
Assets
Cash.......................................................................$25,900
Amounts due from customers...........................................18,750
Truck........................................................................55,350
Total assets..............................................................$100,000
Equities
Owner's equity...........................................................$100,000
After reviewing the financial statements, the loan officer at the bank asked your brother if he used the accrual basis of accounting for revenues and expenses. Your brother responded that he did and that is why he included an account for "Amounts Due from Customers." The loan officer then asked whether or not the accounts were adjusted prior to the preparation of the statements. Your brother answered that they had not been adjusted.
1. Why do you think the loan officer suspected that the accounts had not been adjusted prior to the preparation of the statements?
2. Indicate possible accounts that might need to be adjusted before an accurate set of financial statements could be prepared.

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READY APPLIANCE REPAIRS Income Statement For the Year Ended March 31, 20Y6 Service revenue.... Less: Rent paicd. Wages paid Supplies paid Utilities paid Insurance paid $182,500 .$41,200 34,750 7,000 6,500 ...3,600 9100 Miscellaneous payments 102,150 80,350 Net income