The adjusted trial balance for the year of Nicholl Corporation at October 31,2016, follows.

Requirements
1. Prepare Nicholl Corporation's 2016 single-step income statement, statement of retained earnings, and balance sheet. List expenses (except for income tax) in decreasing order on the income statement, and show total liabilities on the balance sheet. Draw arrows linking the three financial statements.
2. Nicholl's lenders require that the company maintain a debt ratio no higher than 0.50. Com¬pute Nicholl's debt ratio at October 31, 2016, to determine whether the company is in com¬pliance with this debt restriction. If not, suggest a way that Nicholl could have avoided this difficult situation.

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Nicholl Corporation Adjusted Trial Balance October 31, 2016 Debit Credit Account Cash Accounts receivable Supplies Prepaid rent Equipment Accumulated depreciation-equipment Accounts payable Interest payable Unearned service revenue Income tax payable Note payable Common stock Retained earnings Dividends Service revenue Depreciation expense-equipment Salary expense Rent expense Interest expense Insurance expense Supplies expense Income tax expense Total is 15,000- 18,600 2.500 1,800 $ 4,700 60 200 2,500 18,000 16,00 2,900 4,000 93,200 1700 0,500 10,400 2,600 3,800 2,500 7.500 $146,900 $ 146,900