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 $84,000 of cleaning services on account. Collected $76,000 cash from accounts receivable. Paid salaries of $28,500 for the year. Adjusted the accounts to reflect management’s expectations that uncollectible accounts expense would be $1,650. The expense was determined using the percent of the revenue method.
Required
a. 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.