Cambi Company began operations on January 1, 2016. In the second quarter of 2017
ID: 2544625 • Letter: C
Question
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:
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:
Sales for the second quarter of 2017 are $32,000, cost of goods sold under the FIFO method is $10,200, and operating expenses are $4,600. The effective tax rate remains 40 percent. Cambi Company has 1,000 shares of common stock outstanding.
Prepare a schedule showing the calculation of net income and earnings per share that Cambi reports for the three-month period and the six-month period ended June 30, 2017. (Round "Earnings per share" answers to 2 decimal places.)
2016 2017 1stQ 2ndQ 3rdQ 4thQ 1stQ Sales $ 22,000 $ 24,000 $ 26,000 $ 28,000 $ 30,000 Cost of goods sold (LIFO) 5,200 6,200 7,000 8,200 9,700 Operating expenses 3,200 3,400 3,800 4,200 4,400 Income before income taxes $ 13,600 $ 14,400 $ 15,200 $ 15,600 $ 15,900 Income taxes (40%) 5,440 5,760 6,080 6,240 6,360 Net income $ 8,160 $ 8,640 $ 9,120 $ 9,360 $ 9,540Explanation / Answer
Schedule Showing Net Income and Earning per share
Three Month Ended for June30,2017
Six Month Ended for June 30, 2017
Net Income
$10,320
$20,520
Earning Per share
$10.32
$20.52
2016
2017
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
1st Qtr
2nd Qtr
Six Month
Sales
$22,000
$24,000
$26,000
$28,000
$30,000
$32,000
$62,000
Less: Cost of Goods Sold
$5,000
$5,800
$6,400
$7,200
$8,600
$10,200
$18,800
Less: Operating expense
$3,200
$3,400
$3,800
$4,200
$4,400
$4,600
$9,000
Income Before Income Tax
$13,800
$14,800
$15,800
$16,600
$17,000
$17,200
$34,200
Less: Income Tax(40%)
$5,520
$5,920
$6,320
$6,640
$6,800
$6,880
$13,680
Net Income
$8,280
$8,880
$9,480
$9,960
$10,200
$10,320
$20,520
No. of Outstanding Share
1000
1000
1000
1000
1000
1000
1000
Earning Per share
$8.28
$8.88
$9.48
$9.96
$10.20
$10.32
$20.52
Schedule Showing Net Income and Earning per share
Three Month Ended for June30,2017
Six Month Ended for June 30, 2017
Net Income
$10,320
$20,520
Earning Per share
$10.32
$20.52
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.