Question

nu company reported the following pretax data for its first year of operations. net sales 2,820 cost of goods available for sale 2,420 operating expenses 820 effective tax rate 20 % ending inventories: if lifo is elected 840 if fifo is elected 1,130 what is nu's net income if it elects lifo?

Answer 1

Nu's net income if it elects lifo is $552 if lifo is elected 840 if fifo is elected 1,130.

Calculating the problem:

If Nu elects FIFO, we have:

Cost of good sold = Cost of goods available for sale -  Ending inventories

                                     = 2,420 - 1,130

                                    = $1,230

Gross profit =  Net sales - Cost of good sold

                                               = 2,820 - 1,290

                                                   = $1,530

Net operating income = Gross profit - Operating expenses

                                     = 1,530 - 840

                                        = $690

Tax = $690 × 20% = $138

Net income = $690 - $138

                       = $552

Operating Income:

Operating profit refers to the company's adjusted earnings after deducting all operating expenses and depreciation. Operating expenses or operating expenses are simply the costs incurred to keep a business running.

Is operating income the same as sales?

Operating profit is not the same as operating profit. Operating income is the gross cash inflow from primary income-generating activities. Business income is the income after deducting business expenses.

What are good operating income ?

A high operating profit margin indicates that the company is making enough money to pay for all the associated expenses necessary to sustain its business. An operating margin of 15% or higher is considered good for most companies.

Learn more about operating income:

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