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Presented Below Is Information Pertaining To Delsnyder Specialty Foods A

Delsnyder Specialty Foods is a sole proprietorship that maintains its books on a cash basis but converts to an accrual basis for financial reporting. Additional information was provided to make adjustments for accounts receivable, inventory, prepaid rent, prepaid insurance, depreciation, accounts payable, and accrued expenses to complete the conversion to an accrual basis for the year ended December 31, 2016. The accountant needs to complete a worksheet and statement of changes in owner's equity to prepare accrual basis financial statements for a bank loan.

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440 views1 page

Presented Below Is Information Pertaining To Delsnyder Specialty Foods A

Delsnyder Specialty Foods is a sole proprietorship that maintains its books on a cash basis but converts to an accrual basis for financial reporting. Additional information was provided to make adjustments for accounts receivable, inventory, prepaid rent, prepaid insurance, depreciation, accounts payable, and accrued expenses to complete the conversion to an accrual basis for the year ended December 31, 2016. The accountant needs to complete a worksheet and statement of changes in owner's equity to prepare accrual basis financial statements for a bank loan.

Uploaded by

Let's Talk With Hassan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Presented below is information pertaining to Delsnyder

Specialty Foods a #2410


Presented below is information pertaining to Delsnyder Specialty Foods, a calendar-year sole
proprietorship, maintaining its books on the cash basis during the year. At year-end, however,
A. J. Delsnyder’s accountant adjusts the books to the accrual basis only for sales, purchases,
and cost of sales and records depreciation to more clearly reflect the business income.During
2016, Delsnyder signed a new 8-year lease for the store premises and is in the process of
negotiating a loan for remodeling purposes. The bank requires Delsnyder to present financial
statements for 2016 prepared on the accrual basis. To do so, Delsnyder’s accountant obtained
the following additional information for 2016:1. Amounts due from customers totaled $7,900 at
December 31.2. A review of the receivables at December 31, disclosed that an allowance for
doubtful accounts of $1,100 should be provided. Delsnyder had recorded no bad debt losses
from the inception of the company through December 31.3. The inventory amounted to $23,000
at December 31, based on a physical count of goods priced at cost. No reduction to market was
required.4. On signing the new lease on October 1, 2016, Delsnyder paid $8,400, representing
1 year’s rent in advance for the lease year ending October 1, 2017. The $7,500 annual rental
under the old lease was paid on October 1, 2015, for the lease year ended October 1, 2016.5.
On April 1, 2016, Delsnyder paid $2,400 to renew the comprehensive insurance coverage for 1
year. The premium was $2,160 on the old policy, which expired on April 1, 2016.6. Depreciation
on the equipment was computed at $5,800 for 2016.7. Unpaid vendors’ invoices for food
purchases totaled $8,800 at December 31.8. Accrued expenses at December 31, 2015 and
December 31, 2016, were as follows:After obtaining the preceding information, Delsnyder’s
accountant prepared the following partially completed worksheet:Required:1. Complete the
preceding worksheet to convert Delsnyder Specialty Foods’s trial balance to the accrual basis
for the year ended December 31, 2016.2. Prepare a statement showing the changes in A. J.
Delsnyder, Capital, for the year ended December 31, 2016.View Solution:
Presented below is information pertaining to Delsnyder Specialty Foods a

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