The amounts of

(a) the assets and liabilities of Town \& Country Realty at December 31, 2007, 

(b) the revenues and expenses of the company for the year ended on that date follow.

The capital balance of Kevin Kobelsky, the owner, was \(\$ 43,000\) one year ago, at December 31, 2006. During 2007, Kobelsky withdrew \(\$ 32,000\) for personal use.

Requirements 

1. Prepare the income statement of Town \& Country Realty for the year ended December 31, 2007.

2. Prepare the statement of owner's equity for the year ended December \(31,2007\).

3. Prepare the balance sheet at December 31, 2007.

4. Answer these questions about the company:

a. Was the result of operations for the year a profit or a loss? How much?

b. Did Kobelsky drain off all the earnings for the year, or did he increase the company's capital during the period? How would his actions affect the company's ability to borrow?

Transcribed Image Text:

Note payable Property tax expense $ 31,000 Accounts payable $ 12,000 2,000 Accounts receivable 3,000 Rent expense 14,000 Building 56,000 Salary expense 38,000 Cash 7,000 Service revenue 100,000 Equipment 13,000 Supplies 7,000 Interest expense 4,000 Utilities expense 3,000 Interest payable 1,000 Land 8,000