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: 2016 2017 1stQ 2ndQ 3rdQ 4thQ 1stQ Sales $ 26,000 $ 28,000 $ 30,000 $ 32,000 $ 34,000 Cost of goods sold (LIFO) 5,600 6,600 7,400 8,600 10,100 Operating expenses 3,600 3,800 4,200 4,600 4,800 Income before income taxes $ 16,800 $ 17,600 $ 18,400 $ 18,800 $ 19,100 Income taxes (40%) 6,720 7,040 7,360 7,520 7,640 Net income $ 10,080 $ 10,560 $ 11,040 $ 11,280 $ 11,460 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: 2016 2017 1stQ 2ndQ 3rdQ 4thQ 1stQ Cost of goods sold (FIFO) $ 5,400 $ 6,200 $ 6,800 $ 7,600 $ 9,000 Sales for the second quarter of 2017 are $36,000, cost of goods sold under the FIFO method is $10,600, and operating expenses are $5,000. 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.)

Answer 1

Schedule showing the calculation of net income and earning per share for three month
period and six month period ended 30 June 2017
	Three months Period	Six months Period
Sales	$36,000	$70,000
Cost of Goods sold (FIFO)	$10,600	$19,600
Gross Profit	$25,400	$50,400
Operating Expenses	$5,000	$9,800
Income before income taxes	$20,400	$40,600
Income taxes @ 40%	$8,160	$16,240
Net Income	$12,240	$24,360
Common Stock Outstanding	1000	1000
Earning per share	$12.24	$24.36