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Posted by: Christian
Price Quoted by Student: $6
Posted On: 2011-09-17 07:07:37
 
Question
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 customers for services rendered $170,000 $220,000 Cash collected from customers 160,000 190,000 Cash disbursement Salaries paid to employees for services rendered during the year 90,000 100,000 utilities 30,000 40,000 Purchase of insurance policy 60,000 -0-

In addition, you learn that the company incurred utility costs of $35,000 in year one, that there were no liabilities at the end of year two, 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 1-2 on page 8 according to the accrual accounting model.

3. Determine the amount of receivables from customers that the company would show in its year 1 and year 2 balance sheets prepared according to the accrual accounting model.

E 1-1   Accrual accounting. Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy.


Solutions
Exercise 1-1   Requirement 1 Pet
Price $6
Attachment 1: E 1-1 Pete, Pete, and Roy.doc
Solution Posted By: Christian    Posted on: 17-09-2011