Assignment: McPhee Distillers

Accounting Policy Choices in the Preparation of Financial Statements (attached here).

Prepare a

omulti-year[1] balance sheet,

oincome statement, and

ocash flow statement for McPhee Distillers and

obriefly discuss the entity's profitability and

ohow it can make improvements.

The main component of this case study is the financial statements. The discussion section should be no more than a single page. Remember to take the course "Creating Financial Statements in Excel" if possiblethis will help you prepare your financial statements.

When preparing the financial statements, make the following assumptions:

1.Treat sales of whisky as revenue (not deferred revenue nor any other liability).

2.Assume all sales of whisky were paid in cash.

3.Use the first-in, first out method (FIFO) when calculating the Cost of Goods Sold (COGS).

4.Do not include any returned sales.

5.Ignore taxes. (Treat EBIT as net income.)

6.Include all costs listed in Exhibit 3 as fixed costs that fall under Selling, General and Administrative expenses (SG&A). Do not include any with COGS.

7.To clarify some language from the case study: Piercy Distillers purchased 125 barrels in the first year and an additional 175 barrels in the second year.

[1] The start-up capital was raised in 2014. All other transactions occurred in 2015 and 2016. As such, the 2014 portion of the income statement can be left blank or excluded as there were no revenues or expenses in 2014.