The owners of Lamplighter Service Company are selling the business. They offer the trial balance shown on page 76 to prospective buyers.

Your best friend is considering buying Lamplighter Service Company. He seeks your advice in interpreting this information. Specifically, he asks whether this trial balance is the same as a balance sheet and an income statement. He also wonders whether Lamplighter must be a sound company. After all, the accounts are in balance.

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Write a short note to answer your friend's questions. To aid his decision, state how he can use the information on the trial balance to compute Lamplighter's net income or net loss for the current period. State the amount of net income or net loss in your note.

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LAMPLIGHTER SERVICE COMPANY TRIAL BALANCE DECEMBER 31, 19XX Cash.............. $ $ 12,000 Accounts receivable. 27,000 Prepaid expenses 4,000 Land.......... 81,000 Accounts payable........ $ 35,000 Note payable........ 32,000 Common stock. 30,000 Dividends.......... 18,000 Service revenue 104,000 Rent expense... 26,000 Advertising expense.. 3,000 Wage expense.... 23,000 Supplies expense... 7,000 $201,000 $201,000