Hey sorry but I'm having some trouble with income statements. I got the salaries right but other than that I'm lost. 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 Amounts billed to clients for services rendered $ 170,000 $ 220,000 Cash collected from clients 160,000 190,000 Cash disbursements Salaries paid to employees for services rendered during the year 90,000 100,000 Utilities 30,000 40,000 Purchase of insurance policy 60,000 0 In addition, you learn that the firm incurred utility costs of $35,000 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. & 3. Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the firm 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. Revenues not attempted not attempted Expenses: Salaries 90,000selected answer correct 100,000selected answer correct Utilities 30,000selected answer incorrect 40,000selected answer incorrect Insurance 60,000selected answer incorrect 0selected answer incorrect Net income (loss)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hey sorry but I'm having some trouble with income statements. I got the salaries right but other than that I'm lost.

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
Amounts billed to clients for services rendered	$	170,000	$	220,000
Cash collected from clients		160,000		190,000
Cash disbursements
Salaries paid to employees for services rendered during the year		90,000		100,000
Utilities		30,000		40,000
Purchase of insurance policy		60,000		0

In addition, you learn that the firm incurred utility costs of $35,000 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. & 3. Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the firm 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.

Revenues	not attempted	not attempted
Expenses:
Salaries	90,000selected answer correct	100,000selected answer correct
Utilities	30,000selected answer incorrect	40,000selected answer incorrect
Insurance	60,000selected answer incorrect	0selected answer incorrect
Net income (loss)

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