The adjusted trial balance of Sneed Corporation at October 31, 2010, follows:

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

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Sneed Corporation Adjusted Trial Balance October 31, 2010 Credit S 1,600 Accounts receiva . Accumulated depreciation Accounts payable Interest payable Unearned service revenue. Income tax payable. Depreciation expense Interest expense Insurance expense Income tax expense $144,300 $144,300