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	$	184,000		$	234,000
Cash collected from clients		167,000			197,000
Cash disbursements
Salaries paid to employees for services rendered during the year		97,000			107,000
Utilities		33,500			47,000
Purchase of insurance policy		62,100			0

In addition, you learn that the company incurred utility costs of $38,500 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 company 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.

Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the company 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.)

		Year 1	Year 2
1.	Net operating cash flow
3.	Receivables

Prepare an income statement for each year according to the accrual accounting model.

PETE, PETE, AND ROY
Income Statements
	Year 1	Year 2
Revenues
Expenses:
Salaries
Utilities
Insurance
Net income (loss)