Analyze business transactions and prepare financial statements. (LO 1, 2, 3, 4) The accounting department for Setting Sun Vacation Rentals recorded the following transactions for 2009 , the first year of business. Setting Sun generates revenue by renting waterfront condominiums to vacationers to the area. When a reservation is made in advance, Setting Sun collects half the week's rent to hold the reservation. However, Setting Sun does not require reservations, and sometimes customers will come in to rent a unit the same day. These types of transactions require that Setting Sun's accounting department record some cash receipts as unearned revenues and others as earned revenues.

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a. Explain the transaction or event that resulted in each entry in the accounting equation worksheet.

b. Did Setting Sun Vacation Rentals generate net income or net loss for the period ending December 31, 2009? How can you tell?

c. Prepare the four financial statements at year-end.

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Assets Liabilities Shareholder's Equity Contributed Capital Retained Earnings Accounts Prepaid 2. Cash 115,000 Receivable Supplies Rent Property & Accumulated Equipment Depreciation- (P&E) P&E Long-term Interest Salaries Notes Payable Payable Payable Common Stock 115,000 Revenues Expenses b. (112,500) 112,500 85,000 e. 85,000 d. (1,000) 1,000 e. (825) 825 f. 13,150 (615) h. (275) 1. T (1,500) k. 50 795 13,160 (615) (275) (795) (1,500) (50)