Drive Fast Car Rentals generates revenue by renting high speed sports cars to tourists in the area. When a reservation is made in advance, Drive Fast collects half the week€™s rent to hold the reservation. However, Drive Fast does not require reservations, and sometimes customers will come in to rent a unit the same day. The accounting department for Drive Fast recorded the following transactions for 2010, the first year of business. These types of transactions require that Drive Fast€™s accounting department record some cash receipts as unearned revenues and others as earned revenues.

Requirements
1. Explain the transaction or event that resulted in each entry in the accounting equation worksheet.
2. Did Drive Fast Car Rentals generate net income or net loss for the period ended December 31, 2010? How can you tell?
3. Prepare the income statement, statement of changes in shareholders€™ equity, and statement of cash flows for the year ended December 31, 2010, and the balance sheet at December 31,2010.

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Assets Liabilities Shareholders' Equity Contributed Capital Common All other asseis AlIl (Account) liabilities (Account) Transaction Cash stock (Account) 1. $235,000 $235,000 2. (143,000)143,000 Property, plant, and equipment 99,000 Notes payable 99,000 3,0003,000 Supplies (5,00 5,000 Prepaid rent 5. 6. 17,000 Accounts 17,000 Service revenue receivable (925) Supplies (926) Supplies expense (800) Rent expense 1,226) Salary expense 7. S. (800) Prepaid rent 1,225 Salaries payable (2,250) Accumulated depreciation 10 (2,250) Depreciation 225 Interest payable (225) Interest expense - Income Statement Statement of Changes in Shareholders' Equity-Balance Sheet Statement of Cash Flows