Listed below are several transactions that took place during the second and third years of operations for the RPG Company. Year 2 Year 3 Amounts billed to customers for services rendered $350,000 $450,000 Cash collected from credit customers 260,000 400,000 Cash disbursements: Payment of rent 80,000 -0- Salaries paid to employees for services rendered during the year 140,000 160,000 Utilities 30,000 40,000 Advertising 15,000 35,000 In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3. 1. Calculate accrual net income for both years. RPG Company Income Statements Year 2 Year 3 Revenues $350,000.00 $450,000.00 Expenses: Rent 40,000.00 40,000.00 Salaries 140,000.00 160,000.00 Utilities 30,000.00 40,000.00 Advertising 25,000.00 20,000.00 Total expenses: 235,000.00 260,000.00 Net Income $115,000.00 $190,000.00 2. Determine the amount due the advertising agency that would be shown as a liability on RPG's balance sheet at the end of year 2.

Listed below are several transactions that took place during the second and third years of operations for the RPG Company. Year 2 Year 3 Amounts billed to customers for services rendered $350,000 $450,000 Cash collected from credit customers 260,000 400,000 Cash disbursements: Payment of rent 80,000 -0- Salaries paid to employees for services rendered during the year 140,000 160,000 Utilities 30,000 40,000 Advertising 15,000 35,000 In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3. 1. Calculate accrual net income for both years. RPG Company Income Statements Year 2 Year 3 Revenues $350,000.00 $450,000.00 Expenses: Rent 40,000.00 40,000.00 Salaries 140,000.00 160,000.00 Utilities 30,000.00 40,000.00 Advertising 25,000.00 20,000.00 Total expenses: 235,000.00 260,000.00 Net Income $115,000.00 $190,000.00 2. Determine the amount due the advertising agency that would be shown as a liability on RPG's balance sheet at the end of year 2.

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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Listed below are several transactions that took place during the second and third years of operations for the RPG Company.

				Year 2	Year 3
Amounts billed to customers for services rendered				$350,000	$450,000
Cash collected from credit customers				260,000	400,000
Cash disbursements:
	Payment of rent			80,000	-0-
	Salaries paid to employees for services rendered during the year			140,000	160,000
	Utilities			30,000	40,000
	Advertising			15,000	35,000

In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3.
Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.

1. Calculate accrual net income for both years.

RPG Company
Income Statements
		Year 2	Year 3
Revenues		$350,000.00	$450,000.00
Expenses:
	Rent	40,000.00	40,000.00
	Salaries	140,000.00	160,000.00
	Utilities	30,000.00	40,000.00
	Advertising	25,000.00	20,000.00
	Total expenses:	235,000.00	260,000.00
Net Income		$115,000.00	$190,000.00



2. Determine the amount due the advertising agency that would be shown as a liability on RPG's balance sheet at the end of year 2.

I'm working on the problem above and I'm confused about the steps for calculating this as well as the advertising on question 2. I see what the answers are, but I'm unsure of how to get there.

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