Homework

ACC-690 Module Three Quiz

Question Seven

Camibi Company began operations on January 1, 2014. In the second quarter of 2015, it adopted the FIFO method of inventory valution. In the past, it used the LIFO method. The company's interim income statements as orginally reported under the LIFO method follow:

2014 2015

1stQ 2ndQ 3rdQ 4thQ 1stQ

Sales $ 10,000 $ 12,000 $ 14,000 $ 16,000 $ 18,000

Cost of goods sold(LIFO) 4,000 5,000 5,800 7,000 8,500

Operating expenses 2,000 2,200 2,600 3,000 3,200

Imcome before income taxes $4,000 $ 4,800 $ 5,600 $ 6,000 $ 6,300

Income taxes (40%) 1,600 1,920 2,240 2,400 2,520

Net income $ 2,400 $ 2,880 $ 3,360 $ 3,600 $ 3,780

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

1stQ 2ndQ 3rdQ 4thQ 1stQ

Cost of goods sold(FIFO) $ 3,800 $ 4,600 $ 5,200 $ 6,000 $ 7,400

Sales for the second quarter of 2015 are $20,000, cost of goods under the FIFO method is $9,000, and operating expenses are $3,400. The effective 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 demical places.)