Question

Homework Ch 1 6 Saved Help Save & Exlt Submit Check my work 2 Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy Year 1 Year 2 $184,θθθ $234,000 Amounts billed to clients for services rendered Cash collected from clients Cash disbursements Salaries paid to employees for services rendered during the year Utilities Purchase of insurance policy 20 points 97,00θ 107,00θ 33, 500 47, 0ee 62,100 01:54:31 eBook In addition, you learn that the company incurred utility costs of $38,500 in year 1, that there were no liabilities at the end of year 2, no anticipated bad debts on receivables, and that the insurance policy covers a three-year period. Hint Print Required: 1. & 3. Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the company would show in its year 1 and year 2 balance sheets prepared according to the accrual accounting model. 2. Prepare an income statement for each year according to the accrual accounting model. Complete this question by entering your answers In the tabs below Req 1 and 3 R Req 2

Answer 1

Required 1 ;
Calculate the net operating cash flow for Years 1 and 2
		Year 1	Year 2
Net Operating cash flow		$       (25,600)	$     43,000
Explaination :
Pete, pete and Roy
Operating Cash flow
		Year 1	Year 2
Cash collected		$      167,000	$   197,000
Cash disbursements :
Salaries		$        97,000	$   107,000
utilities		$        33,500	$     47,000
Purchase of insurance policy		$        62,100	$            -
Net operating cash flow		$       (25,600)	$     43,000
Required 2 :
Income statement
		Year 1	Year 2
Revenues		$      184,000	$   234,000
Expenses :
Salaries		$        97,000	$   107,000
utilities		$        38,500	$     38,500
Insurance		$        20,700	$     20,700
Net income		$       27,800	$    67,800
Required 3 :
		Year 1	Year 2
Receivables		$    17,000.00	$ 54,000.00
Explaination :
Year 1 :
Amount billed to customers		$ 184,000.00
less : cash collected		$(167,000.00)
Plus : amount billed to customers
Ending accounts receivables		$ 17,000.00
Year 2 :
Beginning accounts receivable		$    17,000.00
less : cash collected		$(197,000.00)
Plus : amount billed to customers		$ 234,000.00
Ending accounts receivables		$ 54,000.00