A biotech company has an effective income tax rate of 40%. Recaptured depreciation is also taxed at the rate of 40%. The company

a. Using FIFO, the Cost of Goods Sold (COGS) is $17,640, while the Ending Inventory equals $12,960. b. Under LIFO, COGS totals $19,160, while the Ending Inventory is $11,440. c. The Weighted Average COGS is $18,360, and the Weighted Ending Inventory is $12,240. For Cortez Company, the inventory particulars include initial stock of 100 units from $60/unit amounting to $6,000, first batch purchase of 150 units at $68 each totaling $10,200, and a second batch of 200 units at $72 each totaling $14,400, culminating in a total of 450 units valued at $30,600. Queries about how COGS and Ending Inventory figures manifest under various methods (FIFO, LIFO, and Weighted Average) can be addressed based on those computations.

Response:

A.

Dec. 28, 20Y3

Dr Accounts Receivable - Beasley Co. 18,500

Cr Sales Revenue 18,500

Dec. 28, 20Y3

Dr Cost of Goods Sold 11,200

Cr Inventory 11,200

B.

Jan. 3, 20Y4

Dr Sales Returns and Allowances 4,000

Cr Accounts Receivable - Beasley Co. 4,000

Jan. 3, 20Y4

Dr Inventory 2,350

Cr Cost of Goods Sold 2,350

C. Jan. 7, 20Y4

Dr Cash 14,210

Dr Sales Discount 290

Cr Accounts Receivable - Beasley Co. 14,500

Explanation:

A. Recording the entry for the sale on December 28, 20Y3, using a perpetual inventory system’s net method.

Dec. 28, 20Y3

Dr Accounts Receivable - Beasley Co. 18,500

Cr Sales Revenue 18,500

Dec. 28, 20Y3

Dr Cost of Goods Sold 11,200

Cr Inventory 11,200

B. Journals to record the returns of merchandise

Jan. 3, 20Y4

Dr Sales Returns and Allowances 4,000

Cr Accounts Receivable - Beasley Co. 4,000

Jan. 3, 20Y4

Dr Inventory 2,350

Cr Cost of Goods Sold 2,350

C. Journal entry to document the receipt of amount owed

Jan. 7, 20Y4

Dr Cash 14,210

[(18,500-4,000)-(18,500-4,000)*2% ]

Dr Sales Discount 290

[(18,500-4,000)*2% ]

Cr Accounts Receivable - Beasley Co. 14,500

(18,500-4,000)

The activity variance totals $20 U. Given the following data: budgeted in March = 7,900 units, actual activity level = 7860 units, revenue = $297,318, direct labor = $59,962, direct materials = $135,850, manufacturing overhead = $51,370, selling and administrative expenses = $31,950. To determine the budgeted selling and administrative expense, the variable expense is calculated as 0.5 × 7900 = $3,950, while the fixed expense remains at $27,400. Hence, total budgeted selling and administrative expenses computes to $31,350. For the flexible budget, the variable expense adjusts to 0.5 × 7860 = $3,930. Therefore, the total flexible budget for selling and administrative cost becomes $31,330. Activity variance, computed as (31350 - 31330), equals $20 U, indicating that actual performance fell below budgeted expectations, with the difference rooted solely in variations between the budgeted and actual activity levels.

For the first year, the depreciation expense amounts to $16,000. This depreciation arises from factors like wear and tear, obsolescence, and duration. Utilizing the straight-line method, the same amount should be allocated across the asset's useful life, as demonstrated in the calculations provided, resulting in a value of $16,000 for year one.