Question - Listed below are several transactions that took place during the first two years of operations for the accounting firm of Christopher Rollins, Inc.
Year 1 Year 2
Amounts billed to customers for services rendered $380,000 $440,000
Cash collected from customers: 330,000 450,000
Cash disbursements:
Payment of rent for two years 60,000 - 0 -
Salaries paid to employees 200,000 210,000
Travel 50,000 60,000
Utilities 25,000 50,000
In addition, you learn that the company incurred utility costs of $35,000 in year one, a third of travel costs paid in year two represented a trip taken in year one, that there were no liabilities at the end of year two, and no anticipated bad debts on receivables.
Calculate the net income for years 1 and 2.