Listed below are several transactions that took place during the second and third years of operations for the RPG Company.
Amounts billed to customers for services rendered
Cash collected from credit customers
Cash disbursements:
Payment of rent
Salaries paid to employees for services rendered during the year
Utilities
Advertising
Year 2
$ 450,000
360,000
90,000
150,000
40,000
20,000
Year 3
$ 550,000
500,000
0
170,000
50,000
45,000
In addition, you learn that the company incurred advertising costs of $35,000 in year 2, owed the advertising agency $6,000 at the
end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated 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 RPG's balance sheet at the end of year 2.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Calculate accrual net income for both years.
Revenues
Year 2
Year 3
