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Connect X M MHE Reader A ALEKS - Ali Sawdackyar-Logg X New Tab screenshot on mac - Google SX + e CA https://ezto
Connect X M MHE Reader A ALEKS - Ali Sawdackyar-Logg X New Tab screenshot on mac - Google SX + e CA https://ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchurl=https%253A%B d. HD Chapter 10 Saved Help Save & Exit Submit Check my work 1 Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy, 16.66 points Year 1 Year 2 $182,000 $240,000 150,000 180,000 Amounts billed to clients for services rendered Cash collected from clients Casit disbursements Salaries paid to employees for services rendered during the year Utilities Purchase of insurance policy 80,000 25,000 57,000 90,000 30,000 0 eBook In addition, you learn that the firm incurred utility costs of $30,000 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. Hint 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. Print References Complete this question by entering your answers in the tabs below. Reg 1 and 3 Reg 2 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. (Net cash outflows should be indicated by a minus sign.) $ 1. Net operating cash flow 3. Receivables Year 1 (12.000) $ 150,000 $ Year 2 60.000 180,000 $ MC Graw Hill EL Prev 1 of 6 Next >
Expert Solution
Ans.
1.
| Particulars | Year 1 | Year 2 |
| Cash Collected from clients | $ 150,000.00 | $ 180,000.00 |
| Less: | ||
| Cash Disbursement: | ||
| Salaries | $ (80,000.00) | $ (90,000.00) |
| Utilities | $ (25,000.00) | $ (30,000.00) |
| Purchase of insurance policy | $ (57,000.00) | $ - |
| Net Operating Cash Flow | $ (12,000.00) | $ 60,000.00 |
2.
| Income Statement | ||
| Particulars | Year 1 | Year 2 |
| Revenues | $ 182,000.00 | $ 240,000.00 |
| Expenses: | ||
| Salaries | $ (80,000.00) | $ (90,000.00) |
| Utilities | $ (30,000.00) | $ (25,000.00) |
| Insurance | $ (19,000.00) | $ (19,000.00) |
| Net income (loss) | $ 53,000.00 | $ 106,000.00 |
Notes:
i) Utility expense for year 1 is $ 30,000 and the payment is made for $ 25,000. Thus, the amount remain unpaid in year 1 is $ 5,000 ( $ 30,000 - $ 25,000) . Utilities paid in Year 2 is $ 30,000 which includes $ 5,000 of year 1. Thus utilities for year 2 is $ 25,000 i.e. ( $ 30,000 - $ 5,000)
ii) Insurance Policy covers three years. Therefore, the cost for each year is $ 19,000 i.e ( $ 57,000 / 3)
3.
| Particulars | Year 1 | Year 2 |
| Beginning Balance | $ - | $ 32,000.00 |
| Add: Amount billed to clients | $ 182,000.00 | $ 240,000.00 |
| Less: Cash Collection | $ (150,000.00) | $ (180,000.00) |
| Receivables | $ 32,000.00 | $ 92,000.00 |
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