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VWX Enterprises Financial Overview as of September 30, 2025: Cash: $16,000 Accounts Receivable: $12,500 Inventory: $21,000 Prepaid Rent: $4,500 Office Equipment: $40,000 Accumulated Depreciation: $8,000

VWX Enterprises Financial Overview as of September 30, 2025:

  • Cash: $16,000
  • Accounts Receivable: $12,500
  • Inventory: $21,000
  • Prepaid Rent: $4,500
  • Office Equipment: $40,000
  • Accumulated Depreciation: $8,000
  • Accounts Payable: $15,000
  • Notes Payable: $10,000
  • Common Stock: $30,000
  • Retained Earnings: $35,000

Requirements:

  1. Prepare a classified balance sheet.
  2. Calculate the acid-test ratio.
  3. Analyze VWX Enterprises' liquidity.
  4. Prepare the adjusting journal entries for:
    • Depreciation expense for the year: $4,000
    • Rent expense for the year: $2,200
  5. Explain the role of prepaid expenses in financial statements.

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