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.