10 points

Item 1

Listed below are several transactions that took place during the second and third years of operations for the ABC Company.

Cash flows:Year 2Year 3Cash collected from credit customers$260,000$400,000Cash disbursements: Salaries paid to employees for services rendered during the year180,000210,000Advertising15,00022,000Utilities8,0006,000Payment of rent80,0000 Balance Sheet informationYear 1Year 2Year 3Accounts receivable - End of year$20,000$35,000$18,000Accounts payable - End of year Payables - Advertising3,0004,0002,000Payables - Utilities8001,2000Accounts payable - total$3,800$5,200$2,000

In addition, you learn that there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.

Required:

1. Calculate the net operating cash flow for years 2 and 3.
2. Prepare an income statement for each year according to the accrual accounting method.

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The rent payment was for a two-year period, year 2 and year 3. Required: Year 2Year 31. Calculate the net operating cash flow for years 2 and 3.$0 2. Prepare an income statement for each year according to the accrual accounting model. ABC CompanyIncome Statements - Accrual basis Year 2Year 3Revenues Expenses: Salaries Advertising Utilities Rent Net income (loss)