Bill Dundee is the owner and operator of Western Bottling, a bulk soft-drink producer. A single production

Question:

Bill Dundee is the owner and operator of Western Bottling, a bulk soft-drink producer. A single production process yields two bulk soft drinks, Rainbow Dew (the main product) and Resi-Dew (the byproduct). Both products are fully processed at the splitoff point, and there are no separable costs.
Summary data for September 2013 are as follows:
—† Cost of soft-drink operations î€„ $144,000
—† Production and sales data:

There were no beginning inventories on September 1, 2013. The following is an overview of operations:

REQUIRED
1. What is the gross margin for Western Bottling under methods A and B of byproduct accounting?
2. What are the inventory amounts reported in the balance sheet on September 30, 2010, for Rainbow Dew and Resi-Dew under each of the two methods of byproduct accounting cited in requirement 1?
3. Which method would you recommend Western Bottling use? Explain.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...