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Hello students, here is a question.
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Listed below are several transactions that took place during the second and third year of operations of rpg company.
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The year 2 and year 3 of accounts billed to the customer for service rendered i .e.
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$410 ,000 and $510 ,000.
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Cash collected from credit customers is $320 ,000 and $460 ,000.
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Cash disbursements or payment of rent is $86 ,000.
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Salary paid to the employee for the service rendered during the year is $146 ,000 and $166 ,000.
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Utilities are $36 ,000 and $46 ,000.
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Advertising are $18 ,000 and $41 ,000.
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In addition, you learn the company incurred advertising cost of $31 ,000 in year 2.
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Owned the advertising agency for $5 ,600 at the end of year 1 and there were a liability at the end of year 3.
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Also, there were no anticipated bad debts or receivables.
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Rent paid was a 2 year period, year 2 and year 3.
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We are required to calculate an accurate net income for both the year 2, determine the amount during an advertising agency.
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That would determine the amount due to an advertising agency would be shown in the liabilities of rpg balance sheet at the end of year 2.
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Let us start doing this problem.
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Our first step will be calculation of accurate net income for both the years i .e.
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For year 2 and year 3.
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So, the first item will be revenues...