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:

1. Provided $160,000 of cleaning services on account.
2. Collected $120,000 cash from accounts receivable.
3. Paid salaries of $36,000 for the year.
4. Adjusted the accounts to reflect managements expectations that uncollectible accounts expense would be $1,900. The expense was determined using the percent of revenue method.

Required

1. Organize the transaction data in accounts under an accounting equation.
2. Prepare an income statement, a balance sheet, and a statement of cash flows for Year 1.