Egret Corporation, a calendar year C corporation, was formed on March 6, 2015, and opened for business on July 1, 2015. After its formation but prior to opening for business, Egret incurred the following expenditures: Accounting $7,000 Advertising 14,500 Employee payroll 11,000 Rent 8,000 Utilities 1,000 Round the per-month amount to two decimal places. Round other computations and the final answer to the nearest dollar. Assuming the company makes the § 195 election, the maximum amount of these expenditures that Egret can deduct in 2015 is $ . Solution Total expense = 41500 (7000 +14500 +11000 +8000+1000) If egret elect to make $195 election then egret can deduct $ 5000 immediately and can amortise remaining expense in 180 months installment beginning with period in which it commences it business Deduction = [5000 + (41500 -5000 ) *6/180 ] = 5000 + (36500 *6/180) = 5000 + 1217 = $ 6217.

1. Ehlo Company is a multiproduct firm. Presented below is information concerning one of its
products, the Hawkeye.
Date
Transaction
Quantity
Price/Cost
Compute cost of goods sold, assuming Ehlo uses: (Round average cost per unit to 2 decimal
places, e.g. 2.76 and final answers to 0 decimal places, e.g. 6,548.)
Date
Transaction
Quantity
Price/Cost1/1Beginning
inventory2,910$162/4Purchase3,910242/20Sale4,410404/2Purchase4,9103111/4Sale4,11044
Solution
Answer A. Periodic system, FIFO cost flow Ending Inventory in Units = Op.
Inventory + Purchases - Sales = 2910 + 3910 + 4910 - 4410
- 4110 = 3210 Units Cost of Goods Sold 2910
Units @ $16 46560 3910 Units @ $ 24 93840 1700 Units @ $31 52700 Total Cost of
Goods Sold 193100 Answer B. Perpetual system, FIFO cost flow Date
Purchases Sales Balance 1/1 Op Inventory 2910 Units @ 16 46560 2/4 3910
Units @ $24 93840 2910 Units @ 16 46560 3910 Units @ $24 93840 2/20 2910
Units @ 16 46560 2410 Units @ $24 57840 1500 Units @ 24 36000 4/2 4910 Units
@ $31 2410 Units @ $24 57840 4910 Units @ $31 152210 11/4 2410 Units @
$24 57840 3210 Units @ $31 99510 1700 Units @ $31 52700 Total Cost of Goods
Sold 193100 Answer C. Periodic system, LIFO cost flow Cost of Goods
Sold 8520 4910 Units @ $31 152210 3610 Units @ $ 24 86640 4910 Total Cost of
Goods Sold 238850 3610 Answer D. Perpetual system, LIFO cost flow
Date Purchases Sales Balance 1/1 Op Inventory 2910 Units @ 16 46560 2/4 3910
Units @ $24 93840 2910 Units @ 16 46560 3910 Units @ $24 93840 2/20 3910
Units @ 24 93840 2410 Units @ $16 38560 500 Units @ 16 8000 4/2 4910 Units @
$31 2410 Units @ $16 57840 4910 Units @ $31 152210 11/4 4110 Units @ $31
57840 2410 Units @ $16 57840 800 Units @ $31 24800 Total Cost of Goods Sold

2. 159680 Answer E. Periodic system, weighted-average cost flow No. Of
Units Cost Per Unit Total Cost 1/1 Op Inventory 2910 16 46560 2/4 Purchases 3910 24
93840 4/2 Purchases 4910 31 152210 Total Goods available for Sale (A) 11730 292610
Less : Cls Inventory (B) 3210 25 80,250 Cost Of Goods Sold (A-
B) 8520 25 212360 Answer F. Perpetual system, moving-average cost flow
Date Inventory Items Units Cost total Cost 1/1 OP inventory 2910 16 46560 2/4
Purchases 3910 24 93840 4/2 Purchases 4910 31 152210 Cost of Goods Sold
2/20 Sales 4410 20.58 90758 11/4 Sales 4110 24.95 102545 Total Cost of Goods Sold
193303