The Nellie Company Has Provided the Following Information

question 51

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;
Extraordinary loss was $29,000;
Income tax expense was $199,000.
What was Nellie's operating income?

• A)$514,000
• B)$54,000
• C)$497,000
• D)$298,000

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Definitions:

Spontaneous Financing

Financing that naturally increases as a firm's operating levels increase, typically through trade credits and accruals.

Five Year Bonds

Debt securities issued with a maturity of five years, typically paying interest semi-annually.

Factor Receivables

The financial practice of selling accounts receivable to a third party at a discount to immediately generate cash.

Uncollectible Accounts

Accounts receivable that are recognized as not being collectible, representing losses to the company.