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 $$150,000$ of cleaning services on account.

Collected $$112,500$ cash from accounts receivable.

Paid salaries of $$42,000$ for the year.

Adjusted the accounts to reflect management$$s expectations that uncollectible accounts expense would be $$2,200.$ 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 $1.$Prepare an income statement for Year $1.$

HOLMES CLEANING SERVICE

Income Statement

For the Year Ended December $31,$ Year $1$