The asset side of the 2016 balance sheet for Willamette Valley Vineyards is below. The company reported cost of goods sold of $7,204,884 in 2016 and $7,092,111 in 2015. Use this information to answer the requirements.
Note 3 to the financial statement reports that Inventories consist of:
Continued next page
Required:
a. Explain in layman's terms what each of the three types of inventories comprises.
b. Compute average days inventory outstanding for both years and interpret any change. At December 31, 2014, Total inventories, net, were $ 9,910,570. What does this ratio mean? Is the year-over-year change good news?
c. It is typical in the winemaking industry for wine to stay in "process" for more than a year. How is such inventory classified in Willamette's balance sheet?

Question

The asset side of the 2016 balance sheet for Willamette Valley Vineyards is below. The company reported cost of goods sold of $7,204,884 in 2016 and $7,092,111 in 2015. Use this information to answer the requirements. 
  Note 3 to the financial statement reports that Inventories consist of:
   Continued next page
Required: 
a. Explain in layman's terms what each of the three types of inventories comprises.
b. Compute average days inventory outstanding for both years and interpret any change. At December 31, 2014, Total inventories, net, were $ 9,910,570. What does this ratio mean? Is the year-over-year change good news?
c. It is typical in the winemaking industry for wine to stay in "process" for more than a year. How is such inventory classified in Willamette's balance sheet?

Quizplus · Accepted Answer

The Answer of The asset side of the 2016 balance sheet for Willamette Valley Vineyards is below. The company reported cost of goods sold of $7,204,884 in 2016 and $7,092,111 in 2015. Use this information to answer the requirements. 
  Note 3 to the financial statement reports that Inventories consist of:
   Continued next page
Required: 
a. Explain in layman's terms what each of the three types of inventories comprises.
b. Compute average days inventory outstanding for both years and interpret any change. At December 31, 2014, Total inventories, net, were $ 9,910,570. What does this ratio mean? Is the year-over-year change good news?
c. It is typical in the winemaking industry for wine to stay in "process" for more than a year. How is such inventory classified in Willamette's balance sheet?

The Asset Side of the 2016 Balance Sheet for Willamette