Listed below are several transactions that took place during the second and third years of operations for the ABC Company.Cash flows:Cash collected from credit customersCash disbursements:Salaries paid to employees for services rendered during the yearAdvertisingUtilitiesPayment of rentBalance Sheet informationAccounts receivable - End of yearAccounts payable - End of yearPayablesPayables UtilitiesAccounts payable - totalAdvertising-Year 1$20,0003,000800$3,800Year 2$260,000180,00015,0008,00080,000Year 2$35,0004,0001,200$5,200Year 3$400,000Year 3$18,0002,0000$2,000Required: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.210,00022,0006,0000In addition, you learn that there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2and year 3.

Under accrual basis, revenues and expenses are recognized and incurred as and when they accrue,…

Listed below are several transactions that took place during the second and third years of operations for the ABC Company. Cash flows: Cash collected from credit customers Cash disbursements: Salaries paid to employees for services rendered during the year Advertising Utilities Payment of rent Balance Sheet information Accounts receivable - End of year Accounts payable End of year Payables Advertising Payables Utilities Accounts payable - total Year 1 $20,000 3,000 800 $3,800 Year 2 $260,000 180,000 15,000 8,000 80,000 Year 2 $35,000 4,000 1,200 $5,200 Year 3 $400,000 Year 3 $18,000 2,000 0 $2,000 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. 210,000 22,000 6,000 0 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.

Listed below are several transactions that took place during the second and third years of operations for the ABC Company. Cash flows: Cash collected from credit customers Cash disbursements: Salaries paid to employees for services rendered during the year Advertising Utilities Payment of rent Balance Sheet information Accounts receivable - End of year Accounts payable End of year Payables Advertising Payables Utilities Accounts payable - total Year 1 $20,000 3,000 800 $3,800 Year 2 $260,000 180,000 15,000 8,000 80,000 Year 2 $35,000 4,000 1,200 $5,200 Year 3 $400,000 Year 3 $18,000 2,000 0 $2,000 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. 210,000 22,000 6,000 0 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.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.16E

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