The owners of Opera Tours Inc. are selling the business. They offer the trial balance that appears at the top of the next page to prospective buyers.
Your best friend is considering buying Opera Tours. She seeks your advice in interpreting this information. Specifically, she asks whether this trial balance provides the data to prepare a balance sheet and an income statement.
Requirement
Write a memo to answer your friend's questions. Indicate which accounts go on the balance sheet and which accounts go on the income statement. State the amount of net income that Opera Tours earned in 2014, and explain your computation.

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Opera Tours Inc. Trial Balance December 31, 2014 $ 12,000 45,000 4,000 231,000 Cash Accounts receivable Prepaid expenses Equipment Accounts payable Note payable Share capital Retained earnings Service Salary expense Tour expenses Rent expense Advertising expense Total $105,000 92,000 30,000 32,000 139,000 69,000 26,000 7,000 4,000_ $398,000 $398,000