Question
Nuland Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. In the past,
Nuland Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The companys Income before income taxes as originally reported under the LIFO method follow:
2019 2020
1stQ 2ndQ 3rdQ 4thQ 1stQ
Income before income taxes . . . $12,000 $12,900 $13,800 $14,200 $14,400
If the FIFO method had been used since the company began operations, Income before income taxes in each of the previous quarters would have been as follows:
2019 2020
1stQ 2ndQ 3rdQ 4thQ 1stQ
Income before income taxes . . . $12,700 $13,300 $14,100 $14,900 $14,800
Sales for the second quarter of 2020 are $42,400, cost of goods sold under the FIFO method is $17,900, and operating expenses are $9,300. The effective tax rate remains 30 percent. Nuland Company has 5,000 shares of common stock outstanding.
Required: Prepare a schedule showing the calculation of net income and earnings per share that Nuland reports for the three-month period and the six-month period ended June 30, 2020, and comparative information for similar periods in 2019.
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