Question

one multi step problem! thank you

Holmes Cleaning Service began operation on January 1, 2018. The company experienced the following events for its first year of operations Events Affecting 2018 1. Provided $220,000 of cleaning services on account 2. Collected $165.000 cash from accounts receivable 3. Paid salaries of $34,000 for the year. 4. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,400. 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 2018 Complete this question by entering your answers in the tabs below. ReqA 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.) HOLMES CLEANING SERVICE Horizontal Statements Model Balance Sheet Assets Equity Accounts Alle Retained Receivable Earnings Event Accounts Titles for Retained Earnings Cash +

Answer 1

Answer -

a. Answer -

Holmes Cleaning Service
Horizontal Statements Model
	Balance Sheet
Event	Assets					=	Equity	Accounts titles for retained earnings
	Cash	+	Accounts receivable	-	Allowance	=	Retained earnings
2018		+		-		=
1.		+	$220000	-		=	$220000	Service revenue
2.	$165000	+	-$165000	-		=
3.	-$34000	+		-		=	-$34000	Salaries expense
4.		+		-	$1400	=	-$1400	Uncollectible accounts expense
Balance	$131000	+	$55000	-	$1400	=	$184600

Calculation:

Here, retained earnings contained income or revenue of company and its uses for paying liabilities and expenses for company.

1. Provided $220000 of cleaning services on accounts, its increase the accounts receivable balance (Assets) by $220000 and also generate revenue for the company (Retained earnings).

2. Collected $165000 cash from accounts receivable. Its increase cash balance for company but decrease the accounts receivable. No effect on account of retained earnings.

3. Paid salaries of $34000 for the year, paying salaries are expense for the company its decrease retained earnings balance and also cash balance.

4. Uncollectible accounts expense are $1400. Paying liabilities and expense decreases retained earnings or owners equity.

b1. Answer -

Holmes Cleaning Service
Income Statement
For the Year Ended December 31, 2018
Service revenue		$220000
Operating expenses:
Salaries expense	$34000
Uncollectible accounts expense	$1400
Total operating expense		$35400
Net income		$184600

Calculation:

1. Total operating expenses = Salaries expense + Uncollectible accounts expense

= $34000 + $1400

= $35400

2. Net income = Revenue - Total operating expenses

= $220000 - $35400

= $184600

b2. Answer -

Holmes Cleaning Service
Balance Sheet
As of December 31, 2018
Assets:
Cash		$131000
Accounts receivable	$55000
Less: Allowance for doubtful accounts	-$1400	$53600
Total assets		$184600
Liabilities		$0
Stockholders equity:
Retained earnings	$184600
Total stockholders equity		$184600
Total liabilities and stockholders equity		$184600

Note: Referred horizontal statements model to know ending balances for accounts such as cash, accounts receivable, allowance for doubtful accounts, and retained earnings.

b3. Answer -

Holmes Cleaning Service
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities:
Inflow from customers	$165000
Outflow for expenses	-$34000
Net Cash flow from operating activities		$131000
Cash flows from investing activities		$0
Cash flows from financing activities		$0
Net change in cash		$131000
Add: Beginning cash balance		$0
Ending cash balance		$131000

Net Cash flow from operating activities = Inflow from customers - Outflow for expenses

= $165000 - $34000 = $131000

Note:

1. Inflow from customers = Cash $165000 collected from accounts receivable

2. Outflow for expenses = Payment of $34000 salaries.

3. Uncollectible accounts expense $1400 is not made in cash. Only cash transactions are recorded under the statement of cash flows.