Part 1 of 5 The adjusted trial balance for the year of Balsamo Corporation at May 31, 2018, follows Click the icon to view the adjusted trial balance) Read the requirements Requirement 1. Prepare Balsamo Corporation's 2018 singlo-stop income statement, statement of retained earnings, and balance sheet Begin by preparing Balsamo's 2018 income statement Balsamo Corporation Income Statement Year Ended May 31, 2018 Income before tax Balsamo Corporation Adjusted Trial Balance May 31, 2018 Account Debit Credit Cash $12,400 Accounts receivable 19,000 2,500 1,000 36,700 $4,300 9,400 Supplies Prepaid rent Equipment Accumulated depreciation equipment Accounts payable Interest payable Unearned service revenue Income tax payable Note payable Common stock 400 1,050 2,600 18,900 10,000 2,500 3,000 94,550 1,600 Retained earnings Dividends Service revenue Depreciation expense equipment Salary expense Rent expense Interest expense Insurance expense Supplies expense 40,100 11,200 3,000 3,500 500 7,200 Income tax expense Total $143.700 $143,700 - Requirements 1. Prepare Balsamo Corporation's 2018 single-step income statement, statement of retained earnings, and balance sheet 2. Balsamo's lenders require that the company maintain a debt ratio no higher than 0.50. Calculate Balsamo's debt ratio at May 31, 2018, to determine whether the company is in compliance with this debt restriction. If not, suggest a way that Balsamo could have avoided this difficult situation