Question

# Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted...

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.)

 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

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