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Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy. Amounts
Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy. Amounts billed to clients for services rendered Cash collected from clients Cash disbursements Year 1 Year 2 $188,000 $238,000 151,000 181,000 Salaries paid to employees for services rendered during the year Utilities 81,000 91,000 Purchase of insurance policy 25,500 31,000 57,300 0 In addition, you learn that the firm incurred utility costs of $30,500 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. Complete this question by entering your answers in the tabs below. Req 1 and 3 Req 2 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. (Net cash outflows should be indicated by a minus sign.) 1. Net operating cash flow 3. Receivables Year 1 Year 2 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 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. Complete this question by entering your answers in the tabs below. Req 1 and 3 Req 2 Prepare an income statement for each year according to the accrual accounting model. PETE, PETE, AND ROY Revenues Expenses: Salaries Utilities Insurance Net income (loss) Income Statements Year 1 Year 2
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