The records of Bart James, Realtor, show the following assets and liabilities as of the end of 1989 and 1990 :

Late in December 1990 (just before the amounts above were calculated), Mr. James purchased in the name of the business, Bart James, Realtor, a small office building and moved the business from rented quarters to the new building. The building and the land cost \(\$ 165,000\). The business paid \(\$ 52,500\) in cash and a note payable was signed for the balance. Mr. James had to invest an additional \(\$ 45,000\) in the business to enable it to pay the \(\$ 52,500\). The business earned a satisfactory net income during 1990 , which enabled Mr. James to withdraw \(\$ 3,000\) per month from the business to pay 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. By comparing the owner's equity amounts in the balance sheets, and using the additional information presented above, prepare a calculation to show the net income earned by the business during 1990 .

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December 31 1989 1990 Cash. $2,300 $ 500 Accounts receivable 1,200 600 Office supplies. 300 150 Automobile 6,200 6,200 For Sale signs 400 400 Office equipment. 2,800 6,250 Land 37,500 Building. 127,500 Accounts payable 750 1,050 Note payable 112,500