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||$||182,000||$||240,000|
|Cash collected from clients||150,000||180,000|
|Salaries paid to employees for services rendered during the year||80,000||90,000|
|Purchase of insurance policy||57,000||0|
In addition, you learn that the company 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.
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.)