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10 points Item 1 Listed below are several transactions that took place during the second and third years of operations for the ABC Company. Cash
10 points
Item 1
Listed below are several transactions that took place during the second and third years of operations for the ABC Company.
Cash flows:Year 2Year 3Cash collected from credit customers$260,000$400,000Cash disbursements: Salaries paid to employees for services rendered during the year180,000210,000Advertising15,00022,000Utilities8,0006,000Payment of rent80,0000 Balance Sheet informationYear 1Year 2Year 3Accounts receivable - End of year$20,000$35,000$18,000Accounts payable - End of year Payables - Advertising3,0004,0002,000Payables - Utilities8001,2000Accounts payable - total$3,800$5,200$2,000In addition, you learn that there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.
Required:
- Calculate the net operating cash flow for years 2 and 3.
- Prepare an income statement for each year according to the accrual accounting method.
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