Question

Nu Company reported the following pretax data for its first year of operations.

Answer 1

Answer:

b.$144

Explanation:

Calculation for Nu's net income if it elects LIFO

Net sales$2,800

Less Cost of goods sold ($1,680)

($2,500 - 820)

Gross profit $1,120

($2,800-$1,680)

Less Operating expenses ($880)

Income before taxes$240

($1,120-$880)

Less Income tax ($96)

($240 x 40%)

Net income$ 144

($240-$96)

Therefore Nu's net income if it elects LIFO will be $144