Question
In: Finance
Listed below are several transactions that took place during the first two years of operations for...
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.)
|
Prepare an income statement for each year according to the accrual accounting model.
|
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Solutions
Expert Solution
| 1 | |||||
| Calculate net operating cash flow for year 1 and year 2 | |||||
| Year 1 | Year 2 | ||||
| Cash collected from clients | $167,000 | $197,000 | |||
| Salaries paid | -$97,000 | -$107,000 | |||
| Utilities expense | -$33,500 | -$47,000 | (47000+38000) | ||
| Insurance policy | -$62,100 | ||||
| Net operating cash flow | -$25,600 | $43,000 | |||
| 3 | |||||
| Calculate amount of receivables for year 1 and year 2 | |||||
| Year 1 | Year 2 | ||||
| Beg. Bal | $0 | $17,000 | |||
| Amount billed to clients | $184,000 | $234,000 | |||
| Cash collected | -$167,000 | -$197,000 | |||
| Amount of receivables | $17,000 | $54,000 | |||
| 2 | |||||
| Income statement for year 1 and year 2 | |||||
| PETE, PETE, AND ROY | |||||
| Income Statements | |||||
| Year 1 | Year 2 | ||||
| Revenues | $184,000 | $234,000 | |||
| Expenses: | |||||
| Salaries | -$97,000 | -$107,000 | |||
| Utilities | -$38,500 | -$42,000 | (47000-(38500-33500) | ||
| Insurance (62100/3) | -$20,700 | -$20,700 | |||
| Net income (loss) | $27,800 | $64,300 | |||
jeff jeffy answered 2 years agoRelated Solutions
Listed below are several transactions that took place during the first two years of operations for...
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...
Listed below are several transactions that took place during the second and third years of operations...
Listed below are several transactions that took place during the
second and third years of operations for RPG Company.
Year 2
Year 3
Amounts billed to customers for
services rendered
$
290,000
$
390,000
Cash collected from credit
customers
200,000
340,000
Cash disbursements:
Payment of rent
74,000
0
Salaries paid to employees for
services rendered during the year
134,000
154,000
Travel and entertainment
24,000
34,000
Advertising
12,000
29,000
In addition, you learn that the company incurred advertising costs
of $19,000...
Listed below are several transactions that took place during the second and third years of operations...
Listed below are several transactions that took place during the
second and third years of operations for the RPG Company.
Year 2
Year 3
Amounts billed to customers for services rendered
$
270,000
$
370,000
Cash collected from credit customers
180,000
320,000
Cash disbursements:
Payment of rent
72,000
0
Salaries paid to employees for services rendered during the
year
132,000
152,000
Utilities
22,000
32,000
Advertising
11,000
27,000
In addition, you learn that the company incurred advertising costs
of $17,000 in...
Listed below are several transactions that took place during the second and third years of operations...
Listed below are several transactions that took place during the
second and third years of operations for RPG Company. Year 2 Year 3
Amounts billed to customers for services rendered $ 370,000 $
470,000 Cash collected from credit customers 280,000 420,000 Cash
disbursements: Payment of rent 82,000 0 Salaries paid to employees
for services rendered during the year 142,000 162,000 Travel and
entertainment 32,000 42,000 Advertising 16,000 37,000 In addition,
you learn that the company incurred advertising costs of $27,000...
Listed below are several transactions that took place during the second and third years of operations...
Listed below are several transactions that took place during the
second and third years of operations for RPG Company.
Year 2 Year 3
Amounts billed to customers for services rendered $400,000
$500,000
Cash collected from credit customers 310,000 450,000
Cash disbursements:
Payment of rent 85,000 0
Salaries paid to employees for services rendered during the year
145,000 165,000
Travel and entertainment 35,000 45,000
Advertising 17,500 40,000
In addition, you learn that the company incurred advertising
costs of $30,000 in year...
Exercise 1-2 Accrual accounting [LO1-2] Listed below are several transactions that took place during the second...
Exercise 1-2 Accrual accounting [LO1-2]
Listed below are several transactions that took place during the
second and third years of operations for RPG Company.
Year 2
Year 3
Amounts billed to customers for
services rendered
$
450,000
$
550,000
Cash collected from credit
customers
360,000
500,000
Cash disbursements:
Payment of rent
90,000
0
Salaries paid to employees for
services rendered during the year
150,000
170,000
Travel and entertainment
40,000
50,000
Advertising
20,000
45,000
In addition, you learn that the company...
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