The Nellie Company has provided the following information: Operating expenses were $115,000;
Gross profit was $629,000;
Cost of goods sold was $470,000;
Interest expense was $17,000;
Income tax expense was $199,000.
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What was Nellie's income before taxes?
A)$514,000.
B)$612,000.
C)$497,000.
D)$298,000.

Question

Quizplus · Accepted Answer

To find Nellie's income before taxes, we need to subtract operating expenses, cost of goods sold, and interest expense from the gross profit:

$629,000 - $115,000 - $470,000 - $17,000 = $27,000

This $27,000 is Nellie's income before taxes. However, we know that Nellie also had $199,000 in income tax expense, so we need to add that back in to find the final answer:

$27,000 + $199,000 = $226,000

Therefore, the correct answer is C) $497,000.

The Nellie Company Has Provided the Following Information: Operating Expenses