SECTIONS The Role of Accounting as an Information System E 1-2 Accrual accounting .LO1-2 400,000 1. Calculate the net operating cash flow for years I and 2. 2. Prepare an income statement for each year similar to Illustration 1-4 according to the accrual accounting model. 3. Des de amount of receivables from clients that the firm would show in its year 1 and year 2 balance hora pred according to the accrual accounting model. Sus cour are several transactions that took place during the second and third years of operations for the RPG Cecipany. Year 2 Year 3 Amounts billed to customers for services rendered Cash collected from credit customers $350,000 $450,000 Cash disbursements: bes SO DE FOTO 260,000 Payment of rent 80,000 Salaries paid to employees for services rendered during the year 140,000 160,000 Travel and entertainment 40,000 Advertising 15,000 25000 35,000 In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no antici- pated 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 RPG's balance sheet at the end of year 2 -0- 30,000 3 B codification Access the FASB Accounting Standards Codification at the FASB website (www.asb. Condtional Format Formatting as Table Check Cell board Explanatory Font Alignment Number 37 f styles B C D E F G H K E1-2 ACCRUAL ACCOUNTING Red below are several transactions that took place during the second and third years of operations for the RPG Company. year 2 year 3 $350,000 $450,000 260,000 400,000 Amounts billed to customers for services rendered Cash collected from credit customer Cash disbursement: Payment of rent Salaries paid to employees for services rendered during the year. Travel and entertainment Advertising 0 80,000 140,000 30,000 15,000 160,000 40,000 35,000 In addition, you learn that the company incurred advertising costs of $ 25,000 in year 2, owed the advertising agency $5,000 at the end of year1, and there were no liabilities at the end of year 3. Also, there were no anti- cipated bad debts on receivables, and the rents payment was for a two-year period, year 2 and year3. 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 RPG's balance sheet at the end of year 2. year 3 Total