The following cash-basis income statement has been prepared for the first year of business

The following cash-basis income statement has been prepared for the first year of business.

Smart Mail, Inc.
Statement of Cash Receipts and Expenditures
For the Year Ending December 31, Year 1

Cash Receipts from Sales of Merchandise

$25,000

Less:

Cash Expenditures for Merchandise and Services

Merchandise

$10,000

Salaries

5,000

Rent

7,000

Total Cash Expenditures

22,000

Excess of Cash Receipts over Cash Expenditures

$ 3,000

At
year-end, the firm had inventory with a cost of $2,000 remaining. Also,
customers owed $1,000 for goods that had already been delivered. The
utilities for December were $500 and were billed to but not yet paid by
the company. The rent of $3,500 for January, Year 2, was paid in
December, Year 1.

Required:
Prepare an accrual-basis income statement for the year.