XYZ Ltd. has provided the following information:

• Cash: $10,000
• Accounts Receivable: $20,000
• Inventory: $30,000
• Accounts Payable: $15,000
• Short-term Loans: $8,000
• Machinery: $60,000
• Accumulated Depreciation: $10,000
• Bonds Payable: $25,000
• Preferred Stock: $40,000
• Retained Earnings: $22,000

Requirements:

1. Create a classified balance sheet.
2. Calculate the total assets and liabilities.
3. Prepare the journal entries for the following:
   • Depreciation expense: $2,000
   • Interest expense on bonds: $1,500
4. Determine the company's equity.
5. Analyze the implications of high inventory levels.