Year $1$ Year $2$

Amounts billed to clients for services rendered $ $182,000$ $ $232,000$

Cash collected from clients $166,000196,000$

Cash disbursements:

Salaries paid to employees for services rendered during the year $96,000106,000$

Utilities $33,00046,000$

Purchase of insurance policy $61,8000$

In addition, you learn that the firm incurred utility costs of $$38,000$ 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:

Prepare an income statement for each year according to the accrual accounting model.