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ng Listed below are several transactions that took place during the first two years of operations for the law Perez Associates. Year 1 Amounts
ng Listed below are several transactions that took place during the first two years of operations for the law Perez Associates. Year 1 Amounts billed to clients for services rendered: $170,000 160,000 Cash collected from clients Year 2 $220,000 190,000 Cash disbursements: Salaries paid to employees for services rendered during the year Utilities 90,000 100,000 30,000 40,000 60,000 Purchase of insurance policy 0 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. Required: 1. Calculate the net operating cash flow for years 1 and 2. 2. Prepare an income statement for each year similar to Illustration 1-4 according to the accrual accounting model. 3. Determine the amount of receivables from clients that the firm would show in its year I and year 2 balance sheets prepared according to the accrual accounting model. Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from customers, $340,000: Cash paid for rent, $40,000; Cash paid to employees for services ren- dered during the year, $120,000; Cash paid for utilities, $50,000. In addition, you determine that customers owed the company $60,000 at the end of the year, and no bad debts were anticipated. Also, the company owed the gas and electric company $2,000 at year-end, and the rent payment was for a two-year period. Calculate accrual net income for the year. For each of the following items, identify the appropriate financial statement element or elements: (1) probable future sacrifices of economic benefits; (2) probable future economic benefits owned by the company; (3) inflows of assets from ongoing, major activities; (4) decrease in equity from peripheral or incidental transactions.
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