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 $176,000 $226,eee 163,000 193,000 Amounts billed to clients for services rendered es rendered Cash collected from clients Cash disbursements Salaries paid to employees for services rendered during the year utilities Purchase of insurance policy 93,000 31,500 60,900 103,899 43,000 In addition, you learn that the firm incurred utility costs of $36,500 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 firm 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. Req 1 and 3 Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the form 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.) - Year1 Year 2 1. Net operating cash flow

Answer 1

Cash flow year 1. Year 2

Received from clients. 163000. 193000

Less : Salaries. 93000. 103000

Less:. Utilities. 68000. 43000

Less : insurance. 60900

Total. -58900. 47000

Trade receivable. Year 1. Year 2

Due from clients. 176000. 226000

Less : received. 163000. 193000

Total. 13000. 33000

Profit. Year 1. Year 2

Revenue. 176000. 226000

Less : expenses

Salaries. 93000. 103000

Utilities. 68000. 43000

Insurance. 60900.   

Total. -45900. 80000