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DEF Ltd. has the following balances as of July 31, 2023: Cash: $12,500 Accounts Receivable: $9,000 Inventory: $20,000 Accounts Payable: $7,000 Salaries Payable: $2,500 Vehicles:
DEF Ltd. has the following balances as of July 31, 2023:
- Cash: $12,500
- Accounts Receivable: $9,000
- Inventory: $20,000
- Accounts Payable: $7,000
- Salaries Payable: $2,500
- Vehicles: $40,000
- Accumulated Depreciation: $6,000
- Bonds Payable: $25,000
- Common Stock: $15,000
- Retained Earnings: $26,000
Requirements:
- Prepare a trial balance.
- Make adjusting entries for:
- Depreciation expense: $2,000
- Inventory adjustment: $1,500
- Prepare an adjusted trial balance.
- Create a statement of cash flows.
- Discuss how inventory adjustments affect financial statements.
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