Karen Harris, a graduate student, has just completed the first summer's operation of a concession on Green Lake, at which she rents boats and sells sandwiches, soft drinks, and candy. She began the summer's operation with \(\$ 7,000\) in cash and a five-year lease on a boat dock and a small concession building on the lake. The lease requires a \(\$ 1,200\) annual rental, although the concession is open only from June 1 through August 31. On opening day, Karen paid the first year's rent and purchased three boats at \(\$ 1,250\) each, paying cash.

During the summer, she purchased food, soft drinks, and candy costing \(\$ 6,400\), all of which was paid for by summer's end, excepting food costing \(\$ 340\) that was purchased during the last week's operation. By summer's end, she had paid electric bills, \(\$ 430\), and wages of a part-time helper, \(\$ 1,200\). She had also withdrawn \(\$ 125\) of earnings of the concession each week for 12 weeks for personal expenses.

She took in \(\$ 3,100\) in boat rentals during the summer and sold \(\$ 13,600\) of food and drinks, all of which was collected in cash, except \(\$ 235\) owed by Lax Company for food and drinks for an employees' picnic.

On August 31, when she closed for the summer, Karen was able to return to the soft drink company several cases of soft drinks for which she received a \(\$ 75\) cash refund. However, she had to take home for personal consumption a number of candy bars and soft drinks that cost \(\$ 50\) and could have been sold for \(\$ 100\). She then sold the three boats to a used boat dealer for \(\$ 500\) each.

Prepare an income statement showing the results of the summer's operations, a statement of changes in owner's equity, and an August 31 balance sheet. Head the statements Boats and Grub. (T-accounts may be helpful in organizing the data.)