Justin Anson Distillery, Inc Essay

Justin Anson Distillery, Inc. is a caller-up that produces quality whiskey and distributes their product throughout America. The order has recently has been nerve-racking to expand and make up their production. In order to join on their production they destiny to obtain more pose in which they can age their whiskey for the necessary 4 years. This is going to incur the society many more embodys in their production and also increase their broth levels. It is straightaway the firms dilemma how to report these new be so their financial statements are accurate but also reflect the harvest-feast they are attempting. It is also important that the companies financial statements reflect will upon the company so they can obtain new loans from the bank to fund their growth. headland AnalysisAssuming Anson decided to charge barrel be (but non warehousing and aging costs) to line of descent, what 2012 income statement and quietus sheet items would change, and what would the n ew get alongs be? (Assume no change in work-in-process instrument)Charging barrel costs to inventory would increase the operating income on the income statement and increase the amount of assets on the equaliser sheet. Both of these values would increase or decrease by the amount of the cost of the barrels, which in 2012 was $4,366. This would increase current assets from $21,813 to $26,179, and the operating income would increase to $6,883.If Ansons suggestion of including all warehousing and aging costs in inventory were accepted, how would the 2012 financial statements be affected? (Assume no change in work-in-process inventory.)The 2012 financial statements would look drastically different if this were the case. Originally the costs charged to cost of goods sold was much greater in 2012 because the extra barrel costs were charged to this account. If they were charged to inventory instead of the cost of goods sold, the company will show a much greater profit. It will also go on to a build of inventory though and the assets of the company will increase dramatically and that will show up in the financials on the balance sheet.In your opinion, what costs should be included in Ansons inventory when preparing financial statements to be submitted to Valley National Bank? The first function that the company should do is checking the ethics of any accounting changes they are cookery on making. If it is found that charging these costs to inventory could cause their statements to not work standards then the changes cannot even be considered. However, if it is acceptable, it would be in the companys best interest to charge only barrel costs to inventory.This would sanction them to still control their inventory levels by allowing them to control how many barrels they want to purchase. Also, the financial statements will still show operating profit because the cost of barrels not being used as a part of sales wont show up in the costs of goods sold section of t he income statement. By including this cost in inventory the company can still report favorable numbers and control their inventory in order to minimize the negative effects of inventory build-up that could hurt their financials in the future.