Listed below are several transactions that took place during the second and third years of operations for the RPG Company.
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 | $ | 360,000 | $ | 460,000 | ||
| Cash collected from credit customers | 270,000 | 410,000 | ||||
| Cash disbursements: | ||||||
| Payment of rent | 81,000 | 0 | ||||
| Salaries paid to employees for services rendered during the year | 141,000 | 161,000 | ||||
| Utilities | 31,000 | 41,000 | ||||
| Advertising | 15,500 | 36,000 | ||||
In addition, you learn that the company incurred advertising costs of $26,000 in year 2, owed the advertising agency $5,100 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated
Required:
1. Calculate accrual net income for both years.
2. Determine the amount due the advertising agency that would be shown as a liability on RPG’s
Complete this question by entering your answers in the tabs below.
- Required 1
- Required 2
Calculate accrual net income for both years.
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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.
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