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

	Year 2			Year 3
Amounts billed to customers for services rendered	$	420,000		$	520,000
Cash collected from credit customers		330,000			470,000
Cash disbursements:
Payment of rent		87,000			0
Salaries paid to employees for services rendered during the year		147,000			167,000
Travel and entertainment		37,000			47,000
Advertising		18,500			42,000

In addition, you learn that the company incurred advertising costs of $32,000 in year 2, owed the advertising agency $5,700 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.

Required:

1.

Calculate accrual net income for both years.

	Year 2	Year 3
Revenues	420000	520000
Expenses:
Rent
Salaries
Travel and Entertaiment
Adverstising
Net Income

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