Listed below are several transactions that took place during the first two years of operations for the law firm of Perez Associates.

Year $1$ Year $2$

Amounts billed to clients for services rendered $ $170,000$ $ $220,000$

Cash collected from clients $160,000190,000$

Cash disbursements:

Salaries paid to employees for services rendered during the year $90,000100,000$

Utilities $30,00040,000$

Purchase of insurance policy $60,0000$

In addition, you learn that the firm incurred utility costs of $$35,000$ 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.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

Year $1$ Year $2$

Revenues

Expenses:

Salaries

Utilities

Insurance

Net income $($loss$)$