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
Cash Expenditures for Merchandise and Services
Total Cash Expenditures
Excess of Cash Receipts over Cash Expenditures
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.
Prepare an accrual-basis income statement for the year.