BCD Co. Financial Data for the Year Ending June 30, 2025:

• Cash: $12,

000

• Accounts Receivable: $13,000
• Inventory: $17,000
• Prepaid Rent: $3,800
• Building: $50,000
• Accumulated Depreciation: $8,500
• Accounts Payable: $11,200
• Notes Payable: $7,500
• Common Stock: $26,000
• Retained Earnings: $27,000

Requirements:

1. Create a classified balance sheet.
2. Compute the debt-to-equity ratio.
3. Evaluate the solvency of BCD Co.
4. Record the adjusting entries for:
   • Depreciation expense for the year: $3,000
   • Rent expense for the year: $1,700
5. Explain how adjusting entries ensure accurate financial statements.