17 The Fountain Inn is a small soft drink retail store. Its first month's operations resulted in the following activity: Sales: Sales totaled $5,000, but only $4,800 was received, because the owner of an adjoining shop purchased $200 worth of drinks during the month and plans to pay his bill next month. Beverage purchases: $1,000 worth of beverages were purchased and paid for during the month. At the end of the month, $200 worth of beverages are on hand for future sales. The beverage inventory was $0 at the beginning of the first month. Wages: The sole employee was paid $1,500 during the month. The employee is still owed $200 for wages during the month, which will be paid in the following month. Utilities: No utility bill was received in the month. On the first day of the following month, a utility bill for the first month of $50 was received. Supplies: $300 worth of supplies was purchased and paid for during the first month. At the end of the month, $100 worth of supplies is still on hand. Rent: Rent of $800 is paid during the first month for the first two months. Rent covers both space and equipment. Required: counting for Business 1. Based on the information provided, prepare a simple income statement based on cash activity (cash accounting). 2. Based on the information provided, prepare a simple income statement based on rev- enue earned and actual expenses incurred (accrual accounting)