Computing net income from equity analysis, preparing a balance sheet, and computing the debt ratio The accounting records of Faviana Adriano Shipping show the following assets and liabilities as of December 31, 2007, and 2008.

Late in December 2008, the business purchased a small office building and land for \($140,000\). It paid \($100,000\) cash toward the purchase and signed a \($40,000\) note payable for the balance. The owner, Faviana Adriano, had to invest \($35,000\) cash in the business to enable it to pay the \($100,000\) cash. The owner withdraws \($3,000\) cash per month for personal use.
Required 

1. Prepare balance sheets for the business as of December 31, 2007, and 2008. (Remember that total equity equals the difference between assets and liabilities.)
2. By comparing equity amounts from the balance sheets each year and using the additional information presented in this problem, calculate how much net income the business earned during 2008.

3. Prepare its income statement for the year ended December 31, 2008, using the following ending balances for revenues and expenses: Shipping services revenue of \($82,000;\) Moving services revenue of \($4,000;\) Rent expense of \($28,000;\) Salaries expense of \($25,710;\) Utilities expense of \($6,400;\) and Miscellaneous expenses of \($2,600.\)

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December 31 2007 2008 Cash Accounts receivable $ 64,300 $ 15,640 26.240 19,390 Office supplies 3,160 1,960 Office equipment 44,000 44,000 Trucks 148,000 157,000 Building 0 80,000 Land 0 60,000 Accounts payable 3,500 33,500 Note payable 0 40,000