Ricky Ricardo, the owner of Online Designs, is selling the business. He offers the trial balance below to prospective buyers.

Your best friend is considering buying Online Designs. She seeks your advice in interpreting this information. Specifically, she asks whether this trial balance is the same as a balance sheet and an income statement. She also wonders whether Online Designs is a sound company. She thinks it must be because the accounts are in balance.
Required
Write a short note to answer your friend's questions. To aid her decision, state how she can use the information on the trial balance to compute Online Designs's net income or net loss for the current period. State the amount of net income or net loss in your note.

Transcribed Image Text:

ONLINE DESIGNS Trial Balance December 31, 2017 $36,000 10,000 4,000 78,000 Accounts receivable Prepaid expenses Accounts payable Note payable R. Ricardo, capital R. Ricardo, withdrawals Service revenue Advertising expense Rent expense Supplies expense Wages expense Total $72,000 44,000 76,000 30,000 130,000 26,000 24,000 18,000 $322,000