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 $200,000 of cleaning services on account.

Collected $150,000 cash from accounts receivable.

Paid salaries of $26,000 for the year.

Adjusted the accounts to reflect managements expectations that uncollectible accounts expense would be $1,700. 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.