The Nellie Company Has Provided the Following Information: Operating Expenses

question 89

Multiple Choice

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.

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Definitions:

Express Warranties

Explicit guarantees provided by a seller regarding the quality, condition, or performance of a product.

Implied Warranties

Legal guarantees assumed in a transaction that the product will meet a minimum level of quality and functionality.

Fitness for a Particular Purpose

A warranty in commercial transactions that a product will meet the specific requirements of the buyer, as known by the seller at the time of sale.

Merchantability

A guarantee that a product will meet reasonable quality and performance expectations as implied in a sales contract.