Ernlo is an accrual basis corporation with a June 30 fiscal year-end. On June 2, 2018, Ernlo entered into a binding contract to purchase a six-month supply of heating oil from a local distributor at the current market price of $12,450. This price is guaranteed regardless of the market price on the delivery date. Ernlo didn't pay its $12,450 bill from the supplier until July 8, and the distributor delivered the oil on October 15.

a. In which taxable year can Ernlo deduct its $12,450 cost of oil if it doesn't elect the recurring item exception as its method of accounting for this annual expense?

b. In which taxable year can Ernlo deduct its $12,450 cost for heating oil if it elects the recurring item exception? heating