Prepare Balsamo Corporation's 2018 single-step income statement, statement of retained earnings, and balance sheet. Balsamo lenders require that the company maintain a debt ratio no higher than

0.50. Calculate Balsamo debt ratio at December 31, 2018, to determine whether the company is in compliance with this debt restriction. If not, suggest a way that Balsamocould have avoided this difficult situation.

Balsamo Corporation

Adjusted Trial Balance

December 31, 2018

Account	Debit	Credit
Cash	$12,400
Accounts receivable	19,600
Supplies	2,200
Prepaid rent	1,200
Equipment	37,100
Accumulated depreciationequipment		$4,100
Accounts payable		9,400
Interest payable		200
Unearned service revenue		700
Income tax payable		2,000
Note payable		18,100
Common stock		14,000
Retained earnings		5,000
Dividends	2,000
Service revenue		89,500
Depreciation expenseequipment	1,100
Salary expense	40,500
Rent expense	11,200
Supplies expense	2200
Income tax expense	6900
Total	$143,000	$143,00