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 2017, and explain your computation.

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Opera Tours Inc. Trial Balance December 31, 2017 2 Cash 3 Accounts receivable 4 5 Equipment 6 Accounts payable $ 12,000 45,000 4,000 231,000 aid e nses $105,000 92,000 30,000 32,000 139,000 7 Note payable 8 Share capital 9 Retained earnin 10 Service revenue 11 Salary e 12 Tour e 13 Rent e 14 Advertising expense 15 Total 16 69,000 26,000 7,000 4,000 $398,000 398,000