Problem
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 $170,000 of cleaning services on account. Collected $127,500 cash from accounts receivable. Paid salaries of $26,000 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.
Task
Organize the transaction data in accounts under an accounting equation. Prepare an income statement, a balance sheet, and a statement of cash flows for Year 1.