The adjusted trial balance for the year of Sunray Corporation at March 31, 2018, follows.

Requirements
1. Prepare Sunray Corporation’s 2018 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, 2018, 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, 2018 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 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 12,000 105,000 1,500 40,400 10,100 2,700 4,300 2,400 7,100 $ 154,500 $ 154,500 26