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:
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.

  • CreatedOctober 05, 2015
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