The adjusted trial balance of Duff & Carson, Inc., at December 31, 20X1, follows on the next page.

Required

1. Prepare Duff & Carson's 20X1 income statement, statement of retained earnings, and balance sheet. List expenses in decreasing order on the income statement and show total liabilities on the balance sheet. Draw arrows linking the 3 financial statements.

2. Compute Duff & Carson's debt ratio at December 31, 20X1, rounding to 2 decimal places. Evaluate the company's debt ratio as strong or weak.

Transcribed Image Text:

Duff & Carson, Inc. Adjusted Trial Balance December 31, 20X1 Cash Accounts receiva ble Prepaid rent Equipment Accumulated depreciation. Accounts payable $11,600 41,400 1,300 67,600 12,900 3,600 4,500 2,100 Interest payable Salary pa yable Income tax payable Note payable Common stock Retained earnings, Dec. 31,20XO.. Dividends Service revenue Depreciation expense 8,800 26,200 12,000 20,300 48,000 165,900 Rent expense Interest expense Income tax expense Total 11,300 44,000 12,000 1,200 18,800 S257,200 $257,200