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Intermediate Accounting Chapter 1








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 1Year 2
  Amounts billed to customers for services rendered$170,000$220,000
  Cash collected from customers160,000190,000
  Cash disbursements:
       Salaries paid to employees for services rendered during the year90,000100,000
       Utilities30,00040,000
       Purchase of insurance policy60,0000

     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.

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