Essay on Darden Case Study
a. To prepare accrual-based financial statements, a company must adjust its accounts. This is accomplished with periodic adjustments (also known as adjusting journal entries or accounting adjustments). For each account below, explain the types of transactions or events that necessitate periodic adjustments to the account for the typical company.
i. “Inventories, net.” – If a company purchases products to be resold, there is an adjustment on the balance sheet to reflect this net inventory.
ii. “Receivables, net.” – If a company sells a product on credit, they do not receive cash, and thus although in increase in retained earnings occurs, and increase …show more content…
f. Assume that the following is an excerpt from Darden’s unadjusted trial balance at May 27, 2007. The debits and credits indicated are the totals in each account before any accounting adjustments have been made for the year end. Prepare any required accounting adjustments for the year ending May 27, 2007. | Unadjusted | Adjustments | Adjusted | Account Title | Debit | Credit | Debit | Credit | Debit | Credit | Receivables, net | 48.5 |