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 $220,000 of cleaning services on account. Collected $165,000 cash from accounts receivable. Paid salaries of $30,000 for the year. Adjusted the accounts to reflect managements expectations that uncollectible accounts expense would be $1,200. The expense was determined using the percent of revenue method.

Required 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.