Required information

Exercise 7-2A Accounting for uncollectible accounts: allowance method LO 7-1

[The following information applies to the questions displayed below.] 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 $210,000 of cleaning services on account.

Collected $157,500 cash from accounts receivable.

Paid salaries of $38,000 for the year.

Adjusted the accounts to reflect managements expectations that uncollectible accounts expense would be $1,300. The expense was determined using the percent of revenue method.

Exercise 7-2A Part c

c. Prepare an income statement, balance sheet, and statement of cash flows for Year 1. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)