41 32 C D E G Problem #1 - Cash Based financials to Accrual & Multi-Step Income Statement Grove Bakery maintains its books on a cash basis. At the end of each year, the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2021: Cash Flows Cash receipts: From customers Loan from a local bank Total cash receipts Cash disbursements: Purchase of merchandise Payment of salaries Total cash disbursements $ 700,000 195,000 S 895,000 $ 350,000 250,000 $ 600,000 Selected Balance Sheet Information Accounts Receivable Inventory Equipment Accumulated Depreciation Salaries Payable Notes Payable Interest Payable Additional Information: 12/31/20 12/31/21 60,000 85,000 70,000 50,000 100,000 100,000 Change 25,000 (20,000) (42,000) (51,000) (9,000) 19,750 23,250 3,500 0 195,000 195,000 0 ? ? On May 31st, 2021, Grove Bakery borrowed $195,000 from a local bank and signed a note promising repayment. Principal and interest are at 8% are due on May 31st, 2022 Instructions: Prepare an accrual basis multi-step income statement for 2021 (ignore income taxes) +