1) Calculate the current-year cost of goods sold (COGS) for each of the independent situations below. Enter the appropriate amounts in the designated cells below. Enter all amounts as positive values. Unless otherwise indicated, items are valued at cost, beginning and/or ending inventory is $0, and gross receipts are less than $1 million each year. Situation

1.Cedar Retailer acquired inventory for $70,000. Cedar received a cash discount that is treated as income of $900 and paid a freight-in cost of $1,500. Cedar sold 70% of its inventory. 2. Deck Retailer, under the FIFO inventory method, had a beginning inventory of 50 units at $9 per unit. In February, it had an inventory purchase of 300 units at $10 per unit. In May, it had another inventory purchase of 100 units at $11 per unit. Deck's ending inventory is 100 units. 3. Emerson Retailer, under the LIFO inventory method, purchased inventory of 300 units at $8 per unit in January. In May, it had another inventory purchase of 100 units at $9 per unit. Emerson's ending inventory is 80 units.

2) Select from the option list provided the time at which the income should be recognized by the taxpayer for each transaction below. Each choice may be used once, more than once, or not at all. 1. Stan received $80,000 to not compete in the area over the next 10 years as part of the sale of his profitable retail store. 2. Anne bought an old house a year ago. This year, she discovered an original Van Gogh painting in the attic worth $150,000. 3. A merchandiser receives prepayment for goods on December 30, Year 1. The goods are shipped to the customer January 3, Year 2. 4. Donald, an accrual method taxpayer, sells merchandise on commission. His employer advanced him $15,000 in future commissions.

Choices: When the goods are shipped. When the money is received. When the Van Gogh painting was discovered.