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

In addition, you learn that the company incurred advertising costs of $28,000 in year 2, owed the advertising agency $5,300 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.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.

****I'm having some trouble understanding how to figure out the accrual based accounting versus cash based accounting. I'm not sure when to show what year certain expenses and revenues should go under. If you could please explain why certain expenses occur in one year and not another it would be of great help to me

Year 2 Year 3 $380,000 $480,000 290,000 430,000 Amounts billed to customers for services rendered Cash collected from credit customers Cash disbursements: Payment of rent Salaries paid to employees for services rendered during the year Utilities Advertising 83,000 143,000 33,000 16,500 163,000 43,000 38,000