Nueva Company reported the following pretax data for its first year of operations. Net sales 7,700...

Question

Question

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


Net sales	7,700
Cost of goods available for sale	5,970
Operating expenses	1,818
Effective tax rate	17	%
Ending inventories:
If LIFO is elected	726
If FIFO is elected	888

How much more will Nueva report in income tax if it elects FIFO instead of LIFO?

Multiple Choice

Answer 1

Answer #1

Calculate how much more will Nueva report in income tax

Difference in ending inventories = 726-888 = 162

Much more = 162*17% = 28

So answer is a) $28

Answer 2

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