Business, 12.06.2020 16:57, 23rwilliamson

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

a. Amounts billed to clients for services rendered $ 178,000 $ 228,000

b. Cash collected from clients 156,000 186,000

c. Cash disbursements:

Salaries paid to employees for services rendered during the year 86,000 96,000

d. Utilities 28,000 36,000

e. Purchase of insurance policy 58,800 0

In addition, you learn that the firm incurred utility costs of $33,000 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.

Required:

1. Calculate the net operating cash flow for years 1 and 2. (Net cash outflows should be indicated by a minus sign.)2. Prepare an income statement for each year according to the accrual accounting model.

Answers: 2

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Listed below are several transactions that took place during the first two years of operations for t...