Question

Nu Company reported the following pretax data for its first year of operations. Net sales 2,800 Cost of goods available for sale 2,500 Operating expenses 880 Effective tax rate 40% Ending inventories: If LIFO is elected 820 If FIFO is elected 1,060 What is Nu's net income if it elects LIFO?

Answer 1

Answer:

$144

Explanation:

The computation of the net income is shown below:

Net income = Net sales - Cost of goods sold - operating expenses  - income tax expense

where,

Cost of goods sold = $2,800 - $880 = $1,680

Income tax expense = ( Net sales - Cost of goods sold - operating expenses) × tax rate

= ($2,800 - $1,680 - $880) × 40%

And, the other items values would remain the same

Now put these values to the above formula  

So, the value would equal to

= $2,800 - $1,680 - $880 - $96

= $144