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 customers for services rendered $ 170,000 $ 220,000
- Cash collected from customers 160,000 190,000
Cash disbursements:
- Salaries paid to employees for services rendered during the year 90,000 100,000
- Utilities 30,000 40,000
- Purchase of insurance policy 60,000 0
In addition, you learn that the company incurred utility costs of $35,000 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. (Net cash outflows should be indicated by a minus sign.)