Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31: 1. A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1.
2. The company's pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay. Employees earn a total of $12,800 per week.
3. On December 1, rent on the office building had been paid for three months. The monthly rent is $7,000.
4. Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12,360; no change has occurred in the account during the year.
5. All fees totaling $19,800 were earned during the month for clients who had paid in advance.

What should be the balance of the Prepaid Rent?

a. $0
b. $7,000
c. $14,000
d. $21,000

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 1 year 2amounts billed to clients for services rendered $ 170,000 $ 220,000 cash collected from clients 160,000 190,000 cash disbursements salaries paid to employees for services rendered during the year 90,000 100,000 utilities 30,000 40,000 purchase of insurance policy 60,000 0 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.required: 1. & 3. calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the company would show in its year 1 and year 2 balance sheets prepared according to the accrual accounting model.2. prepare an income statement for each year according to the accrual accounting model.