Comprehensive (Appendix 3.1) 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. Trial Balance December 31, 2019 Debit Credit Cash $18,500 Accounts Receivable, 12/31/18 4,500 Inventory, 12/31/18 20,000 Equipment 35,000 Accumulated Depreciation, 12/31/18 $9,000 Accounts Payable, 12/31/18 4,800 Payroll Taxes Withheld 850 A. J. Delsnyder, Withdrawals 24,000 A. J. Delsnyder, Capital, 12/31/18 33,650 Sales 187,000 Purchases 82,700 Salaries 29,500 Payroll Taxes 2,900 Rent 8,400 Miscellaneous Expense 3,900 Insurance 2,400 Utilities 3,500 $235,300 $235,300 During 2019, 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 2019 prepared on the accrual basis. To do so, Delsnyder's accountant obtained the following additional information for 2019: Amounts due from customers totaled $7,900 at December 31. 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. 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. On signing the new lease on October 1, 2019, Delsnyder paid $8,400, representing 1 year's rent in advance for the lease year ending October 1, 2020. The $7,500 annual rental under the old lease was paid on October 1, 2018, for the lease year ended October 1, 2019. On April 1, 2019, 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, 2019. Depreciation on the equipment was computed at $5,800 for 2019. Unpaid vendors' invoices for food purchases totaled $8,800 at December 31. Accrued expenses at December 31, 2018 and December 31, 2019, were as follows: 12/31/18 12/31/19 Payroll taxes $250 $400 Salaries 375 510 Utilities 275 450 After obtaining the preceding information, Delsnyder's accountant prepared the following partially completed worksheet: Cash Basis Adjustments Accrual Basis Accounts Debit Credit Debit Credit Debit Credit Cash 18,500 Accounts Receivable 4,500 Allowance for Doubtful Accounts Inventory 20,000 Equipment 35,000 Accumulated Depreciation 9,000 Prepaid Rent Prepaid Insurance Accounts Payable 4,800 Accrued Expenses Payroll Taxes Withheld 850 A. J. Delsnyder, Withdrawals 24,000 A. J. Delsnyder, Capital 33,650 Sales 187,000 Purchases 82,700 Income Summary—Inventory Salaries 29,500 Payroll Taxes 2,900 Rent 8,400 Miscellaneous Expenses 3,900 Insurance 2,400 Utilities 3,500 Depreciation Bad Debts Totals 235,300 235,300 Required: 1. Complete the preceding worksheet to convert Delsnyder Specialty Foods's trial balance to the accrual basis for the year ended December 31, 2019. Enter all amounts as positive numbers. DELSNYDER SPECIALTY FOODS Worksheet to Convert Trial Balance to Accrual Basis December 31, 2019 Cash Basis Debit Cash Basis Credit Adjustments Debit Adjustments Credit Accrual Basis Debit Accrual Basis Credit Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation Prepaid rent Prepaid insurance Accounts payable Accrued expenses Payroll taxes withheld A. J. Delsnyder, withdrawals A. J. Delsnyder, capital Sales Purchases Income summary—inventory Salaries Payroll taxes Rent Miscellaneous expense Insurance Utilities Depreciation Bad Debts 2. Prepare a statement showing the changes in A. J. Delsnyder, Capital, for the year ended December 31, 2019. DELSNYDER SPECIALTY FOODS Statement of Changes in A. J. Delsnyder, Capital For the Year Ended December 31, 2019 A. J. Delsnyder, capital, 12/31/18 $ Add: Net income for year $ Deduct: Withdrawals for year A. J. Delsnyder, capital, 12/31/19 $

Comprehensive (Appendix 3.1) 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. Trial Balance December 31, 2019 Debit Credit Cash $18,500 Accounts Receivable, 12/31/18 4,500 Inventory, 12/31/18 20,000 Equipment 35,000 Accumulated Depreciation, 12/31/18 $9,000 Accounts Payable, 12/31/18 4,800 Payroll Taxes Withheld 850 A. J. Delsnyder, Withdrawals 24,000 A. J. Delsnyder, Capital, 12/31/18 33,650 Sales 187,000 Purchases 82,700 Salaries 29,500 Payroll Taxes 2,900 Rent 8,400 Miscellaneous Expense 3,900 Insurance 2,400 Utilities 3,500 $235,300 $235,300 During 2019, 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 2019 prepared on the accrual basis. To do so, Delsnyder's accountant obtained the following additional information for 2019: Amounts due from customers totaled $7,900 at December 31. 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. 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. On signing the new lease on October 1, 2019, Delsnyder paid $8,400, representing 1 year's rent in advance for the lease year ending October 1, 2020. The $7,500 annual rental under the old lease was paid on October 1, 2018, for the lease year ended October 1, 2019. On April 1, 2019, 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, 2019. Depreciation on the equipment was computed at $5,800 for 2019. Unpaid vendors' invoices for food purchases totaled $8,800 at December 31. Accrued expenses at December 31, 2018 and December 31, 2019, were as follows: 12/31/18 12/31/19 Payroll taxes $250 $400 Salaries 375 510 Utilities 275 450 After obtaining the preceding information, Delsnyder's accountant prepared the following partially completed worksheet: Cash Basis Adjustments Accrual Basis Accounts Debit Credit Debit Credit Debit Credit Cash 18,500 Accounts Receivable 4,500 Allowance for Doubtful Accounts Inventory 20,000 Equipment 35,000 Accumulated Depreciation 9,000 Prepaid Rent Prepaid Insurance Accounts Payable 4,800 Accrued Expenses Payroll Taxes Withheld 850 A. J. Delsnyder, Withdrawals 24,000 A. J. Delsnyder, Capital 33,650 Sales 187,000 Purchases 82,700 Income Summary—Inventory Salaries 29,500 Payroll Taxes 2,900 Rent 8,400 Miscellaneous Expenses 3,900 Insurance 2,400 Utilities 3,500 Depreciation Bad Debts Totals 235,300 235,300 Required: 1. Complete the preceding worksheet to convert Delsnyder Specialty Foods's trial balance to the accrual basis for the year ended December 31, 2019. Enter all amounts as positive numbers. DELSNYDER SPECIALTY FOODS Worksheet to Convert Trial Balance to Accrual Basis December 31, 2019 Cash Basis Debit Cash Basis Credit Adjustments Debit Adjustments Credit Accrual Basis Debit Accrual Basis Credit Cash Accounts receivable Allowance for doubtful accounts Inventory Equipment Accumulated depreciation Prepaid rent Prepaid insurance Accounts payable Accrued expenses Payroll taxes withheld A. J. Delsnyder, withdrawals A. J. Delsnyder, capital Sales Purchases Income summary—inventory Salaries Payroll taxes Rent Miscellaneous expense Insurance Utilities Depreciation Bad Debts 2. Prepare a statement showing the changes in A. J. Delsnyder, Capital, for the year ended December 31, 2019. DELSNYDER SPECIALTY FOODS Statement of Changes in A. J. Delsnyder, Capital For the Year Ended December 31, 2019 A. J. Delsnyder, capital, 12/31/18 $ Add: Net income for year $ Deduct: Withdrawals for year A. J. Delsnyder, capital, 12/31/19 $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Comprehensive (Appendix 3.1)

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.

Trial Balance
December 31, 2019
	Debit	Credit
Cash	$18,500
Accounts Receivable, 12/31/18	4,500
Inventory, 12/31/18	20,000
Equipment	35,000
Accumulated Depreciation, 12/31/18		$9,000
Accounts Payable, 12/31/18		4,800
Payroll Taxes Withheld		850
A. J. Delsnyder, Withdrawals	24,000
A. J. Delsnyder, Capital, 12/31/18		33,650
Sales		187,000
Purchases	82,700
Salaries	29,500
Payroll Taxes	2,900
Rent	8,400
Miscellaneous Expense	3,900
Insurance	2,400
Utilities	3,500
	$235,300	$235,300

During 2019, 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 2019 prepared on the accrual basis. To do so, Delsnyder's accountant obtained the following additional information for 2019:

Amounts due from customers totaled $7,900 at December 31.
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.
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.
On signing the new lease on October 1, 2019, Delsnyder paid $8,400, representing 1 year's rent in advance for the lease year ending October 1, 2020. The $7,500 annual rental under the old lease was paid on October 1, 2018, for the lease year ended October 1, 2019.
On April 1, 2019, 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, 2019.
Depreciation on the equipment was computed at $5,800 for 2019.
Unpaid vendors' invoices for food purchases totaled $8,800 at December 31.
Accrued expenses at December 31, 2018 and December 31, 2019, were as follows:

	12/31/18	12/31/19
Payroll taxes	$250	$400
Salaries	375	510
Utilities	275	450

After obtaining the preceding information, Delsnyder's accountant prepared the following partially completed worksheet:

	Cash Basis	Adjustments	Accrual Basis
Accounts	Debit	Credit	Debit	Credit	Debit	Credit
Cash	18,500
Accounts Receivable	4,500
Allowance for Doubtful Accounts
Inventory	20,000
Equipment	35,000
Accumulated Depreciation		9,000
Prepaid Rent
Prepaid Insurance
Accounts Payable		4,800
Accrued Expenses
Payroll Taxes Withheld		850
A. J. Delsnyder, Withdrawals	24,000
A. J. Delsnyder, Capital		33,650
Sales		187,000
Purchases	82,700
Income Summary—Inventory
Salaries	29,500
Payroll Taxes	2,900
Rent	8,400
Miscellaneous Expenses	3,900
Insurance	2,400
Utilities	3,500
Depreciation
Bad Debts
Totals	235,300	235,300

Required:

1. Complete the preceding worksheet to convert Delsnyder Specialty Foods's trial balance to the accrual basis for the year ended December 31, 2019. Enter all amounts as positive numbers.

DELSNYDER SPECIALTY FOODS
Worksheet to Convert Trial Balance to Accrual Basis
December 31, 2019
	Cash Basis Debit	Cash Basis Credit	Adjustments Debit	Adjustments Credit	Accrual Basis Debit	Accrual Basis Credit
Cash
Accounts receivable
Allowance for doubtful accounts
Inventory
Equipment
Accumulated depreciation
Prepaid rent
Prepaid insurance
Accounts payable
Accrued expenses
Payroll taxes withheld
A. J. Delsnyder, withdrawals
A. J. Delsnyder, capital

Sales
Purchases
Income summary—inventory
Salaries
Payroll taxes
Rent
Miscellaneous expense
Insurance
Utilities
Depreciation
Bad Debts

2. Prepare a statement showing the changes in A. J. Delsnyder, Capital, for the year ended December 31, 2019.

DELSNYDER SPECIALTY FOODS
Statement of Changes in A. J. Delsnyder, Capital
For the Year Ended December 31, 2019
A. J. Delsnyder, capital, 12/31/18	$
Add: Net income for year
	$
Deduct: Withdrawals for year
A. J. Delsnyder, capital, 12/31/19	$

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