Nan Hall and Mike Linden were partners in a nursery. They disagreed, closed the business, and ended their partnership. In settlement for her partnership interest, Nan Hall received an inventory of trees, plants, and garden supplies having a \(\$ 22,500\) cost. Since there was nothing practical she could do with the inventory, except to open a new nursery, she did so by investing the inventory and \(\$ 18,000\) in cash. She used \(\$ 15,000\) of the cash to buy equipment, and she opened for business on May 1. During the succeeding eight months, she paid out \(\$ 63,750\) to creditors for additional trees, plants, and garden supplies and \(\$ 21,000\) in operating expenses. She also withdrew \(\$ 15,000\) for personal expenses, and at the year-end, she prepared the balance sheet that follows.

Based on the information given, prepare calculations to determine the net income earned by the business, the cost of goods sold, and the amount of its sales. Then prepare an income statement showing the result of the nursery's operations during its first eight months.

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Cash. Merchandise inventory. Equipment Less depreciation Total assets. NAN'S NURSERY Balance Sheet December 31, 1990 $ 8,550 26,650 $15,000 Nan Hall, capital. Accounts payable (all for merchandise). $ 3,300 45,700 1,200 13,800 Total liabilities and $49,000 owner's equity. $49,000