The adjusted trial balance for the year of Sunray Corporation at March 31, 2021, follows. 

Requirements 

1. Prepare Sunray Corporation’s 2021 single-step income statement, statement of retained earnings, and balance sheet. Draw arrows linking the three financial statements. 

2. Sunray’s lenders require that the company maintain a debt ratio no higher than 0.50. Calculate Sunray’s debt ratio at March 31, 2021, to determine whether the company is in compliance with this debt restriction. If not, suggest a way that Sunray could have avoided this difficult situation.

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A1 Sunray Corporation Adjusted Trial Balance March 31, 2021 2 Account 3 Cash 4 Accounts receivable 5 Supplies 6 Prepaid rent 7 Equipment 8 Accumulated depreciation-equipment 9 Accounts payable 10 Interest payable 11 Unearned service revenue 12 Income tax payable 13 Note payable 14 Common stock 15 Retained earnings 16 Dividends 17 Service revenue 18 Depreciation expense-equipment 19 Salary expense 20 Rent expense 21 Interest expense 22 Insurance expense 23 Supplies expense 24 Income tax expense 25 Total 26 Debit $ 13,000 19,300 2,900 1,600 37,200 Credit $ 4,200 9,000 500 1,100 2,100 18,600 12,000 2,000 12,000 1,500 40,400 10,100 2,700 4,300 2,400 7,100 $ 154,500 $ 154,500 105,000