Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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,

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Front Office Operations And Night Audit Workbook

Authors: Patrick J. Moreo, Gail Sammons, Jim Dougan, James Dougan

1st Edition

0133987698, 978-0133987690

Students also viewed these Accounting questions

Question

Distinguish a civil obligation from a natural obligation.

Answered: 1 week ago