Listed below are several transactions that took place during the second two years of operations for RPG Consulting.
Year 2 Year 3
- Amounts billed to customers for services rendered $350,000 $450,000
- Cash collected from credit customers $260000 $400000
- Cash Disbursement:
- Payment of rent 80000 0
- Salaries paid to employees for services rendered through the yr. 140000 160000
- Traveling and Entertainment 30000 40000
- Advertising 15000 35000
In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipatedCash collected from credit customers bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.
Required:
1.Calculate accrual net income for both years.
2.Determine the amount due the advertising agency that would be shown as a liability on the RPG's balance sheet at the end of year