The adjusted trial balance of Schneider Corporation at July 31, 2010, follows.

Requirements
1. Prepare Schneider Corporations 2010 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. Schneider€™s lenders require that the company maintain a debt ratio no higher than 0.60.
Compute Schneider€™s debt ratio at July 31, 2010, to determine whether the company is in compliance with this debt restriction. If not, suggest a way that Schneider could have avoided this difficultsituation.

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Schneider Corporation Adjusted Trial Balance July 31, 2010 Account DebitCredit S 2,000 9,400 2,400 1,200 Accounts receivable Prepaid rent.. Equipment. Accumulated depreciation. Accounts payable Interest payable Unearned service revenue Income tax payable Note payable Common stoc Retained earnings Dividends Service Depreciation expense Salary expense Rent expense Interest ex Insurance expense ……… Supplies expense....2,800 Income tax expense $ 4,200 3,400 18,900 4,000 5,000 21,000 102,100 1,700 39,800 10,300 3,300 3,500 6,500 $140,500 $140,500