The adjusted trial balance of Reid and Campbell Ltd. at December 31, 2017, appears below.

Requirements

1. Prepare Reid and Campbell Ltd.'s 2017 income statement, statement of retained earnings, and balance sheet. List expenses in decreasing order on the income statement and show total liabilities on the balance sheet. Draw arrows linking the three financial statements.

2. Compute Reid and Campbell Ltd.'s debt ratio at December 31, 2017, rounding to two decimal places. Evaluate the company's debt ratio as strong or weak?