Ret Problem: Module 2 Textbook Problem 1 Learning Objective: 2-2 Use the percent of revenue method to account for uncollectible accounts expense 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 $150,000 of cleaning services on account. 2. Collected $112,500 cash from accounts receivable. 3. Paid salaries of $24,000 for the year. 4. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,300. 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Reg A Req B1 Req B2 Reg B3 does not indicate con 1 Complete this question by entering your answers in the tabs below. 5 ints Req A Reg 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 Assets Equity NRV + Accounts Retained Receivable Earnings Event Cash Accounts Titles for Retained Earnings Year 1 1. + 150,000 2. 150,000= (112,500) = Service revenue 112,500 (24,000) + 3 + 4 (24,000) Salaries expense (1,300) Uncollectible accounts expense 124,700 Bal. (1,300) = 36,200 88,500 Mc Graw Ret Complete this question by entering your answers in the tabs below. Reg A Req B1 Reg B2 Reg B3 Prepare an income statement for Year 1. HOLMES CLEANING SERVICE Income Statement For the Year Ended December 31, Year 1 Service revenue 150,000 Operating expenses Salaries expense Uncollectible accounts expense $ 24,000 1,300 Total operating expenses 25,300 Net Income 124,700 Complete this question by entering your answers in the tabs below. 5 oints Req A Req B1 Req B2 Req B3 Prepare a balance sheet for Year 1. $ 88,500 HOLMES CLEANING SERVICE Balance Sheet As of December 31, Year 1 Assets Cash Accounts receivable $ 36,200 Less: Allowance for doubtful accounts 1,300 Total assets Liabilities Stockholders' Equity Retained earnings $124,700 0 34,900 $123,400 Total stockholders' equity Total liabilities and stockholders' equity 124,700 $ 124,700 Reg B1 Rea B3