4 Cambi Company began operations on January 1, 2016. In the second quarter of 20

Question

4 Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of Inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow 1.5 points 2016 1sto 2ndQ 3rdQ 4thQ 25,000$27,000 $29.000 $31,000 33,000 Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (408) 7,300 4,100 8,50010,000 6,500 3,700 5,500 ,50031700 400 6.7207 4,500 $ 16,000 16.800$17,600 18,00018,300 .040 7,2007.320 eBook Print References Net incone $ 9,600 $20,080 10,560 10,80010,980 If the FIFO method have been as follows: had been used since the company began operations, cost of goods sold in each of the previous quarters would 2016 2017 tbo 3rdo $5,300 $6,100 $6,700 s7,500 8,900 lsto 2ndo Cost of goods sold (FIFO) sales for the second quarter of 2017 are $35,000, cost of goods sold under the FIFO method is $10,500, and $4,900. The effective tax rate remains 40 percent. Cembi Company has 1,000 shares of common stock outstandi operating expenses are and Prepare a schedule showing the the six-month period ended June 30, 2017. (Round "Earnings per share" answers to 2 decimal places.) calculation of net income and earnings per share that Cambi reports for the three-month period Three Months Ended Six Months Ended June 30 June 30 2017 2016 2017 2016

Explanation / Answer

Change in the method of inventory valuation requires retrospective appilication.

Three months ended June 30

Six months ended June 30

2016 2017 Sales 27,000 35,000 Cost of goods sold (FIFO) 6,100 10,500 Operating expenses 3,700 4,900 Income before taxes 17,200 19,600 Income taxes (40%) 6,880 7,840 Net income 10,320 11,760 Net income per common share (Net income/commonstock outstanding) 10.32 11.76

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