Holmes Cleaning Service began operation on January 1, Year 1. The company experienced the following events for its first year of operations:
Events Affecting Year 1:
Provided $180,000 of cleaning services on account.
Collected $135,000 cash from accounts receivable.
Paid salaries of $36,000 for the year.
Adjusted the accounts to reflect management’s expectations that uncollectible accounts expense would be $2,200. The expense was determined using the percent of revenue method.
Requireda. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement, a balance sheet, and a statement of cash flows for year 1.