Sleep Cheap is a private camping ground near the Lathom Peak Recreation Area.

It has compiled the following financial information as of December 31, 2007.

Revenues during 2007: camping fees $137,000 Dividends $ 9,000 Revenues during 2007: general store 25,000 Notes payable 50,000 Accounts payable 11,000 Expenses during 2007 129,000 Cash 8,500 Supplies 2,500 Equipment 119,000 Common stock 40,000 Retained earnings (1/1/2007) 5,000 Instructions

(a) Determine net income from Sleep Cheap for 2007.

(b) Prepare a retained earnings statement and a balance sheet for Sleep Cheap as of December 31, 2007.

(c) Upon seeing this income statement, Terry Stevens, the campground manager immediately concluded, “The general store is more trouble than it is worth—let’s get rid of it.” The marketing director isn’t so sure this is a good idea. What do you think?