The adjusted trial balance of Griffith Corporation at March 31, 2014, follows. Requirements 1. Prepare Griffith Corporations

The adjusted trial balance of Griffith Corporation at March 31, 2014, follows.

Requirements
1. Prepare Griffith Corporation’s 2014 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. Griffith’s lenders require that the company maintain a debt ratio no higher than 0.50. Compute Griffith’s debt ratio at March 31, 2014, to determine whether the company is in compliance with this debt restriction. If not, suggest a way that Griffith could have avoided this difficultsituation.

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A1 Griffith Corporation Adjusted Trial Balance March 31, 2014 Account Cash Accounts receivable Deblt Credit S12,400 18,800 2,600 700 36,000 S Supplies Prepaid rent Equipment Accounts payable Unearned service revenue 8 Accumulated depreciation, equipment 5,600 9,100 700 800 10 Interest payable 1 Note payable 6 Dividends 12 Income tax payable Common stock 5 Retained earnings Service revenue 1 Depreciation expense 2,400 18,400 13,000 2,900 9,000 105,500 300 49,800 10,700 2,700 4,000 Salary expense 20 Rent expense Interest expense 2 Insurance expense 2 Supplies expense 4 Income tax expense 7,000 Total