Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy.

	Year 1			Year 2
Amounts billed to clients for services rendered	$	178,000		$	228,000
Cash collected from clients		164,000			194,000
Cash disbursements
Salaries paid to employees for services rendered during the year		94,000			104,000
Utilities		32,000			44,000
Purchase of insurance policy		61,200			0

In addition, you learn that the firm incurred utility costs of $37,000 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.

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