Stephen Anest started a new business called "Repairs R Us, Inc." at the beginning of the year. Unfortunately, Stephen has not maintained any accounting records, except for keeping track of all cash receipts and cash disbursements which are presented below. In addition, all unpaid invoices are kept in a file until 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 prepare an accrual basis income statement for the year. The following information should help in the preparation of the income statement:
1. The equipment has a useful life of ten years.
2. Supplies on hand at the end of the period have a cost of $3,000.
3. The shop rent is $500 per month, but the lease requires two months in advance.
4. The insurance was paid at the beginning of the year and represents a two-year policy.
5. Customers owe the shop $3,200 for services already performed.
6. The workers were hired this year and are owed $550 at the end of the year for work in December.