The adjusted trial balance of Nicholl Corporation at May 31, 2012, follows: Requirements 1. Prepare Nicholls 2012

The adjusted trial balance of Nicholl Corporation at May 31, 2012, follows:

Requirements
1. Prepare Nicholl’s 2012 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. Nicholl’s lenders require that the company maintain a debt ratio no higher than 0.60. Compute Nicholl’s debt ratio at May 31, 2012, to determine whether the company is in compliance with this debt restriction. If not, suggest a way Nicholl could have avoided this difficultsituation.

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Nicholl Corporation Adjusted Trial Balance May 31, 2012 DebitCredit 0 Accounts receivable rent Accumulated depreciation Income tax payable 9 Depreciation expense $138,900 $138,900