Terrace Board Rentals was started on January 1, 2022, by Ryan Terrace with an investment of $50,000 cash. The company rents out snowboards and related gear from a small store. During the first 11 months, Terrace made additional investments of $20,000 and borrowed $40,000 from the bank for the business. He did not withdraw any funds. The balance sheet accounts at November 30, 2022, are as follows:

The following transactions took place during the month of December 2022:

Required

1. What is the total net income earned by the business over the period of January 1, 2022, to November 30, 2022?

2. Analyze the effects of the December 2022 transactions on the accounting equation of Terrace Board Rentals. Include the account balances from November 30, 2022. Adapt the format of Exhibit 1–11, Panel B, shown below.

3. Prepare the income statement for Terrace Board Rentals for the month ended December 31, 2022. List expenses in decreasing order of amount.

4. Prepare the statement of owner’s equity for Terrace Board Rentals for the month ended December 31, 2022.

5. Prepare the balance sheet for Terrace Board Rentals at December 31, 2022.

6. Terrace has expressed concern that although the business seems to be profitable and growing, he constantly seems to be investing additional money into it. Prepare a reply to his concerns.

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Cash........... Accounts Receivable.. Rental Gear........... Rental Snowboards. Store Equipment...... Accounts Payable........ Note Payable......... R. Terrace, Capital......... $ 45,000 15,000 32,000 48,000 30,000 12,000 40,000 118,000