Final answer:
The rent and salaries for year 2 total $85,000. Without additional information, the annual depreciation for machinery and provision for bad debts are estimates, the latter being potentially set at $200. Subtracting the explicit costs from the revenue provides an apparent accounting profit of $115,000 before depreciation and provisions are applied.
Step-by-step explanation:
To calculate the rent and salaries for year 2, you begin with the explicit costs provided. The office rental cost for year 2 would be the sum of the two amounts, which equals $50,000 + $35,000, resulting in a total of $85,000. This total includes the rent and the law clerk's salary, meaning no additional calculation for salaries is needed unless more data is provided.
Moving onto the annual depreciation charge for machinery, without specific figures given for the machinery cost or the length of useful life, it is challenging to provide an exact number. Generally, depreciation is calculated by taking the purchase price of an asset minus its salvage value, divided by the estimated useful life of the asset.
For the provision for bad and doubtful debts, if we consider the provided range of 240-40, this could imply setting aside $200 ($240 minus $40) as a provision for potential bad and doubtful debts.
Finally, to compute the accounting profit, you subtract the explicit costs from the revenues: $200,000 - $85,000, which would yield an accounting profit of $115,000 before considering depreciation and provisions for bad debts.