The adjusted trial balance of Reid and Campbell Ltd. at December 31, 2020, appears below.

Requirements
1. Prepare Reid and Campbell Ltd.'s 2020 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, 2020, rounding to two decimal places. Evaluate the company's debt ratio as strong or weak.

Transcribed Image Text:

1 23 Cash A Reid and Campbell Ltd. Adjusted Trial Balance December 31, 2020 Accounts receivable 4 Prepaid rent 569 Store furnishings Accumulated depreciation 7 Accounts payable B D $ 11,600 +1,400 1,300 67,600 $ 12.900 3,600 8 Deposits 4,500 9 Interest payable 900 10 Salary payable 2,100 11 Income tax payable 8,800 12 Note payable 26,200 13 Share capital 12,000 14 Retained earnings, Dec. 31, 2019 20,300 15 Dividends 48,000 16 Sales 165,900 17 Depreciation expense 11,300 18 0 Salary expense 44.000 19 Rent expense 12,000 20 Interest expense 1,200 21 Income tax expense 18.800 22 Total $ 257.200 $ 257,200 23