Adjusted Trial Balance and Financial Statements

Trial Balance Data:

• Cash: $45,000
• Prepaid Rent: $5,000
• Accounts Receivable: $25,000
• Salaries Payable: $3,000
• Capital: $72,000

Adjustments:

• Rent expense: $2,000 (expired)
• Salaries expense: $3,000 (incurred but not paid)

Requirements:

1. Prepare the adjusted trial balance.
2. Prepare the income statement and balance sheet based on the adjusted trial balance.
3. Discuss the significance of adjustments in financial reporting.