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1. In preparing its second quarter interim financial statements, a calendar year company reported the...

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Accounting

1. In preparing its second quarter interim financial statements, a calendar year company reported the following information:

First quarter taxable income $100,000
First quarter income tax expense 6,000
Second quarter taxable income 40,000

As of the second quarter, the company had an estimated effective annual income tax rate of 20%. What amount should the company report as income tax expense in its interim income statement for the second quarter?

A.$2,000

B.$8,000

C.$22,000

D.$28,000

2. A company with a calendar year end uses the LIFO method to value its inventory in the annual and interim financial statements. On January 1, Year 2, the company's inventory balance was reported at $80,000. Market prices decreased in the second quarter, causing a potential realized inventory loss of $15,000. The decline was not expected to reverse by December 31, Year 2. However, the inventory's market price recovered, resulting in inventory valuations of $85,000 in the third quarter and $88,000 in the fourth quarter. At what amount should the company report inventory on its September 30, Year 2 interim balance sheet?

A.$65,000

B.$80,000

C.$85,000

D.$88,000

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