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STU Ltd. has the following balances as of August 31, 2025: Account Amount Cash $17,000 Accounts Receivable $16,000 Inventory $20,000 Prepaid Insurance $2,600 Building $65,000
STU Ltd. has the following balances as of August 31, 2025:
Account | Amount |
Cash | $17,000 |
Accounts Receivable | $16,000 |
Inventory | $20,000 |
Prepaid Insurance | $2,600 |
Building | $65,000 |
Accumulated Depreciation | $13,000 |
Accounts Payable | $16,000 |
Notes Payable | $7,000 |
Long-Term Debt | $30,000 |
Common Stock | $55,000 |
Retained Earnings | $18,600 |
Requirements:
- Create a classified balance sheet.
- Calculate the current ratio and quick ratio.
- Evaluate STU Ltd.'s short-term financial health.
- Prepare adjusting journal entries for:
- Depreciation expense: $6,500
- Insurance expense: $1,300
- Discuss how adjusting entries ensure the accuracy and completeness of financial reports.
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