LMN Inc. Financial Data for June 30, 2024:

• Cash: $20,000
• Accounts Receivable: $18,000
• Supplies: $5,000
• Accounts Payable: $10,000
• Rent Payable: $2,000
• Furniture: $40,000
• Accumulated Depreciation: $15,000
• Bank Loan: $20,000
• Common Stock: $30,000
• Retained Earnings: $26,000

Requirements:

1. Prepare a trial balance.
2. Record adjusting entries for the following:
   • Depreciation expense: $3,000
   • Rent expense: $2,500
3. Prepare an adjusted trial balance.
4. Prepare a balance sheet.
5. Discuss why adjusting entries are necessary.