Answer:
$434
Explanation:
Net sales = $2,910
-Cost of goods sold = $1,560 (Working)
=Gross profit = $1350
-Operating expenses = $730
=Profit before Tax = $620
-Tax 30% = $186
=Net Profit/Net Income= $434
Working
Cost of goods sold = Cost of goods available for sale - Closing Inventory if LIFO is elected
Cost of goods sold = 2,430 - 870 = 1560
Answer:
Ending inventory is $464
Explanation:
The question is to determine Nu Company's net income based on the Last In First Out (LIFO) method of stock valuation.
Step 1: It should be noted that the cost of goods available for sale is usually the total of opening inventory and purchases of inventory.
Since, the cost of goods available is already given in the question, then Cost of Goods Sold which is required for gross profit or income will be obtained as follows:
Step 2: Cost of Goods Sold= Cost of Goods available - Closing Inventory
At LIFO method, then closing inventory will be $870
Therefore, Cost of Goods Sold = $2,430 - $870= $1,560
Step 3: Now the Net Income can be calculated (Net Income before Tax)
= Net sales - COGS (calculated in step 2)- Operating expenses
$2,910- $1,560-$730
= $620
Step 4: Calculate the Net income after tax
= Net Income before taxation * (1 - given tax rate); tax rate is 30%
= $620 x (70%)
=$620 *0.70
= $464
