The accounting records of Viola Nunez's medical practice show the following assets and liabilities as of the end of 1989 and 1990 :

During the last week of December 1990 (just before the amounts above were calculated), Dr. Nunez purchased a small office building in the name of the medical practice, Viola Nunez, M.D., and moved her practice from rented quarters to the new building. The building and the land it occupies cost \(\$ 195,000\); the practice paid \(\$ 50,000\) in cash and signed a note payable for the balance. Dr. Nunez had to invest an additional \(\$ 40,000\) in the practice to enable it to pay the \(\$ 50,000\). The practice earned a satisfactory net income during 1989, which enabled Dr. Nunez to withdraw \(\$ 3,200\) per month from the practice to pay her personal living expenses.
\section*{Required}
1. Prepare two balance sheets for the business, as of the end of 1989 and the end of 1990. (Remember that the owner's equity equals assets less liabilities.)
2. Using the information presented above and by comparing the owner's equity amount in the balance sheets, prepare a calculation to show the net income earned by the business during 1990 .

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Cash Accounts receivable. Office supplies. . 5,700 1,000 December 31 1989 $ 9,600 1990 $ 1,600 7,000 800 Automobile. 4,800 4,800 Office equipment 18,500 23,200 Land 70,000 Building 125,000 Accounts payable. 1,400 1,600 Notes payable. 145,000