50.1K

Verified Solution

Link Copied!

Cambi Company began operations on January 1, 2014. In the second quarter of 2015, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The companys interim income statements as originally reported under the LIFO method follow:

	2014												2015
	1st Q			2nd Q			3rd Q			4th Q			1st Q
Sales	$	21,000		$	23,000		$	25,000		$	27,000		$	29,000
Cost of goods sold (LIFO)		5,100			6,100			6,900			8,100			9,600
Operating expenses		3,100			3,300			3,700			4,100			4,300
Income before income taxes	$	12,800		$	13,600		$	14,400		$	14,800		$	15,100
Income taxes (40%)		5,120			5,440			5,760			5,920			6,040
Net income	$	7,680		$	8,160		$	8,640		$	8,880		$	9,060

If the FIFO method had been used since the company began operations, cost of goods sold in each of the previous quarters would have been as follows:

	2014												2015
	1st Q			2nd Q			3rd Q			4th Q			1st Q
Cost of goods sold (FIFO)	$	4,900		$	5,700		$	6,300		$	7,100		$	8,500

Sales for the second quarter of 2015 are $31,000, cost of goods sold under the FIFO method is $10,100, and operating expenses are $4,500. The effective tax rate remains 40 percent. Cambi Company has 1,000 shares of common stock outstanding.

Calculate the net income and earnings per share that Cambi reports for the three-month period and the six-month period ended June 30, 2015. (Round "Earnings per share" answers to 2 decimal places.)

References

eBook & Resources

Problem

Answer & Explanation Solved by verified expert

See Answer