Transcribed Image Text: Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete,

Academic Writing accounting, business-managerial-accounting Transcribed Image Text: Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete,

accounting, business-managerial-accounting

Transcribed Image Text: Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete,

Transcribed Image Text: 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
Cash collected from clients
$170,000 $220,000
160,000 190,000
Cash disbursements
Salaries paid to employees for services rendered during the year
Utilities
Purchase of insurance policy
90,000 100,000
30,000
40,000
60,000
In addition, you learn that the firm incurred utility costs of $35,000 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. Prepare an income statement for each year according to the accrual accounting model.
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