Answer:
<u>Cash Flow</u>
year 1: cash generated in operating activities:    35,000
year 2: cash used in operating activities (28,000)
<u>Receivables:</u>
year 1: 23,000
year 2: 40,000
<u>Net Income</u>
year 1: 32,000
year 2: 59,000
Explanation:
<u></u>
Cash flow:
<u>operating activities: year 1</u>
collected from client                    170,000 
salaries paid to employees        (100,000)
utilities                                           (35,000)
insurance policy                           (63,000)
cash used in operating activities (28,000)
<u>operating activities: year 2</u>
collected from client                     200,000
salaries paid to employees           (110,000)
utilities                                             (55,000)
cash generated in operating activities:    35,000
receivable:
billed - collected
year 1 receivables 193,000 - 170,000 = 23,000
year 2 receivables 240,000 - 200,000 = 40,000
<u>Income Statement year 1</u>
fees revenues 193,000
salaries           (100,000)
utilities            (40,000) (incurred cost)
insurance        (21,000)  (63,000 for three years, the value of 1 year is 21,000)
net income          32,000
<u></u>
<u>Income Statement year 2</u>
fees revenues 240,000
salaries           (110,000)
utilities            (50,000) (incurred cost)
insurance        (21,000)  (63,000 for three years, the value of 1 year is 21,000)
net income      59,000