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Listed below are several transactions that took place during the first two years of operations for the law firm of Perez Associates. Year 1
Listed below are several transactions that took place during the first two years of operations for the law firm of Perez Associates. Year 1 Amounts billed to clients for services rendered Cash collected from clients $ 174,000 158,000 Year 2 $ 224,000 188,000 Cash disbursements: Salaries paid to employees for services rendered during the year Utilities Purchase of insurance policy 88,000 29,000 59,400 98,000 38,000 In addition, you learn that the firm incurred utility costs of $34,000 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. Note: Net cash outflows should be indicated by a minus sign. 1. Net operating cash flow 3. Receivables Year 1 Year 2 < Req 1 and 3 Req 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. Perez Associates Income Statements Revenues Expenses: Salaries Utilities Year 1 Year 2 Insurance Net income (loss) < Req 1 and 3 Req 2 >
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