1 . Estimate the effect on the financial claims in Dining tables 1 and 2 in the event the accounting program were converted to incorporate the cost of barrels (\$31. 50 each) into the products on hand accounts. a. What will pretax earnings be in 1961?

Booker Williams increased creation by 20, 000 barrels. If the cost of barrels can be \$31. 55, then these 20, 500 barrels might cost \$630, 000. This will likely be added to inventory consideration and hence will certainly generate pretax profit of \$630, 000 вЂ“ 407, 000 sama dengan \$223, 500. b. In case the change were created retroactively since July one particular, 1959 (by adding the price tag on barrels to all or any whiskey in inventory), what would be the impact on i. The total amount sheet at the end of 60?

Compared to 1959, balance sheet in 1960 will include the cost of barrels in inventory accounts. Since June 30, 1960 the number of gallons of whisky was 4, 506, 000 / \$0. 52 = eight, 665, 484. 62 gallons. Add \$31. 5 / 50 gal/bbl = \$0. 63 for the \$0. 52 cost to get large whiskey inventory of eight, 665, 484. 62 2. \$1. 15 = \$9, 965, 192. 31.

Next, we would need to gross in the value of Bottled and Cased Tequila by the costs of ageing barrels. In this account, there are only 35 gallons as well as bbl (due to evaporation), so the expense increase can be \$31. your five / thirty five = \$0. 90. Applying this boost gives \$1, 969, 1000 / \$11. 20 5. (11. 20 + zero. 90) sama dengan \$2, 127, 223. 21.

Total change in whiskey stocks would be being unfaithful, 965, hundranittiotv?. 31 вЂ“ 4, 506, 000. 00 = \$5, 459, hundranittiotv?. 31 intended for bulk tequila and \$158, 223. 21 for a grand total incrase in stocks of \$5, 617, 415. 52. Due to the fact that this asset school would go up with no corresponding increase in liabilities, Shareholder's Fairness would increase by the same amount.

ii. The balance sheet at the end of 1961?

Following the same logic as (i. ) above, volume whiskey might become 5, 030, 000 /. 52 * 1 . 15 sama dengan \$11, 124, 038. 46 and completed whiskey would become one particular, 969, 1000 / eleven. 20 5. 12. 10 = \$2, 127, 223. 21. This leads to a grand total increase in stocks of \$6, 252, 261. 67, and an identical embrace Shareholder's Fairness. iii. The operating...