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 $140,000 of cleaning services on account. 2. Collected $105,000 cash from accounts receivable. 3. Paid salaries of $48,000 for the year. 4. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,200. The expense was determined using the percent of 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. Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) HOLMES CLEANING SERVICE Horizontal Statements Model Balance Sheet Equity Event Assets NRV + Accounts Receivable Accounts Titles for Retained Earnings Cash Retained Earnings Year 1 1. + = 140,000 Service revenue 140,000 (105,000) 2. = 105,000 + (48,000) + 3. 4. + = (1,200) 33,800 (48,000) Salaries expense (1,200) Uncollectible accounts expense 90,800 Bal. 57,000 + = Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 Prepare an income statement for Year 1. HOLMES CLEANING SERVICE Income Statement For the Year Ended December 31, Year 1 Service revenue $ 140,000 Operating expenses Salaries expense $ 48,000 Uncollectible accounts expense 1,200 Total operating expenses Net income 49,200 $ 90,800 Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 Prepare a balance sheet for Year 1. HOLMES CLEANING SERVICE Balance Sheet As of December 31, Year 1 Assets Cash $ 57,000 Accounts receivable $ 33,800 (1,200) Less: Allowance for doubtful accounts 32,600 $ 89,600 Total assets Liabilities 0 Stockholders' Equity Retained earnings $ 89,600 Total stockholders' equity Total liabilities and stockholders' equity 89,600 $ 89,600 Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 Prepare a statement of cash flows for Year 1. (Cash outflows should be indicated with a minus sign.) HOLMES CLEANING SERVICE Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash 0 Ending cash balance 0
