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Stephen Anest started a new business called ‘Repairs R Us, Inc.’ at the start of the year. Unfortunately, Stephen has not managed any accounting records, except for keeping track of all cash receipts and cash disbursements that are given below. Additionally, all unpaid invoices are stored in a file till they are paid.

Cash Receipts:

Investment by Owner -                                                       $45,000

Cash collected from customers -                                         $72,000

Total Cash Received -                                                         $117,000

Cash Disbursements:

Show equipment -                                                               $25,000

Repair supplies -                                                                  $15,000

Rent -                                                                                   $7,000

Insurance Premiums -                                                          $1,500

Advertising -                                                                        $1,000

Utilities -                                                                              $1,500

Employee' Wages -                                                             $18,500

Dividends to owner Stephen Anest -                                  $10,000

Total Cash Disbursed -                                                       $79,500

Cash Balance as of December 31, 2011                             $37,500

Anest has asked you to make an accrual basis income statement for the year. The following information must aid in the preparation of income statement:

i) The equipment has a useful life of ten years.

ii) Supplies on hand at the end of the period have a cost of $3,000.

iii) The shop rent is $500 per month; however the lease needs two months in advance.

iv) The insurance was paid at the beginning of the year and represents a two-year policy.

v) Customers owe the shop $3,200 for services already performed.

vi) The workers were appointed this year and are owed $550 at the end of the year for work in Dec.

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