Calculate the net operating cash flow for years

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Reference no: EM133415865

Listed below are several transactions that took place during the first two years of operations for the law firm of Perez Associates.

Year 1 Year 2
Amounts billed to clients for services rendered $ 174,000 $ 224,000
Cash collected from clients 158,000 188,000
Cash disbursements:
Salaries paid to employees for services rendered during the year 88,000 98,000
Utilities 29,000 38,000
Purchase of insurance policy 59,400 0

In addition, you learn that the firm incurred utility costs of $34,000 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. & 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. ENTER an income statement for each year according to the accrual accounting model.

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.

Reference no: EM133415865

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