The Following Two Separate Situations Require Adjusting Journal Entries to Prepare

question 166

Essay

The following two separate situations require adjusting journal entries to prepare financial statements as of the fiscal year ended April 30. For each situation, present both the April 30 adjusting entry and the subsequent entry during May to record the payment of the accrued expenses or receipt of the accrued revenue.

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Definitions:

Sales

The total revenue generated from goods or services sold by a company during a specified period.

Invested Assets

Invested assets refer to the resources put into financial instruments or assets with the expectation of earning a return, including stocks, bonds, real estate, and other investment vehicles.

DuPont Formula

A method for analyzing a company's return on equity (ROE), breaking it down into three components: operating efficiency, asset use efficiency, and financial leverage.

Profit Margin

The percentage of revenue that remains after all expenses have been deducted from sales, indicating the financial health and profitability of a business.