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.