Amounts billed to clients for services rendered $ 172,000 $ 222,000 cash collected from clients 159,000 189,000 cash disbursements salaries paid to employees for services rendered during the year 89,000 99,000 utilities 29,500 39,000 purchase of insurance policy 59,700 0 in addition, you learn that the firm incurred utility costs of $34,500 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.

balance sheet accounts receivable:

year 1     13,000

year 2   46,000

Cash flow                          year 1           year 2

collected from client       159,000     189,000

salaries paid                     (89,000)    (99,000)

utilities                              (29,500)    (39,000)

purhcase of insurance     (59,700)

net                                     (19,200)     51,000

Income statement     year 1          year 2

Sales revenue          172,000       222,000

Salaries expense     (89,000)       (99,000)

Utilities expense      (34,500)       (34,500)*

Insurance expense   (19,900)       (19,900)

Net income               28,600        68,600

Explanation:

balance sheet accounts receivable:

year 1: sales - collected 172,000 - 159,000 = 13,000

year 2: beginning balance + sales - collected

            13,000               +  222,000 - 189,000 = 46,000

Cash flow: we subtract from the amount collected the cash disbursements.

The income statment will be done based on the amount billed and the expenses accrued during each period, regardless of the time of collection/payment

*Utilities expense:

year 1 incurrent 34,500 cost and paid 29,000 so there is a 4,500 payable which is set on year 2.

*Insurance expense:

59,700 is thecost for three years, so we divide by three to get the value of one year.  59,700 / 3 = 19,900

the answer is a. $209,000

hi there, i would say your answer is:

b. there is a fixed quantity of resources and technology available.

hope that : )