2019 2020 1stQ $ 31,000 6,100 4,100 $ 20,800 5,200 2ndQ $ 33,000 7,100 4,300 $ 21,600 5,400 3rdQ $ 35,000 7,900 4,700 $ 22,400 5,600 4thQ $ 37,000 9,100 5,100 $ 22,800 5,700 $17,100 1stQ $39,000 10,600 5,300 $ 23,100 5,775 $ 17,325 Sales Cost of goods sold (LIF0) Operating expenses Income before income taxes Income taxes (25%) Net income $ 15,600 $ 16,200 $ 16,800 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: 2019 2020 1stQ $5,900 2ndQ $6,700 3rdQ $7,300 4thQ $8,100 1stQ $9,500 Cost of goods sold (FIF0) Sales for the second quarter of 2020 are $41,000, cost of goods sold under the FIFO method is $11,100, and operating expenses are $5,500. The effective tax rate remains 25 percent. Volata Company has 1,000 shares of common stock outstanding. Prepare a schedule showing the calculation of net income and earnings per share that Volata reports for the three-month period and the six-month period ended June 30, 2020. (Round "Earnings per share" answers to 2 decimal places.)
2019 2020 1stQ $ 31,000 6,100 4,100 $ 20,800 5,200 2ndQ $ 33,000 7,100 4,300 $ 21,600 5,400 3rdQ $ 35,000 7,900 4,700 $ 22,400 5,600 4thQ $ 37,000 9,100 5,100 $ 22,800 5,700 $17,100 1stQ $39,000 10,600 5,300 $ 23,100 5,775 $ 17,325 Sales Cost of goods sold (LIF0) Operating expenses Income before income taxes Income taxes (25%) Net income $ 15,600 $ 16,200 $ 16,800 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: 2019 2020 1stQ $5,900 2ndQ $6,700 3rdQ $7,300 4thQ $8,100 1stQ $9,500 Cost of goods sold (FIF0) Sales for the second quarter of 2020 are $41,000, cost of goods sold under the FIFO method is $11,100, and operating expenses are $5,500. The effective tax rate remains 25 percent. Volata Company has 1,000 shares of common stock outstanding. Prepare a schedule showing the calculation of net income and earnings per share that Volata reports for the three-month period and the six-month period ended June 30, 2020. (Round "Earnings per share" answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. Previously, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method are as follows:
### 2019
| | 1st Q | 2nd Q | 3rd Q | 4th Q |
|-------|--------|--------|--------|--------|
| Sales | $31,000| $33,000| $35,000| $37,000|
| Cost of goods sold (LIFO) | 6,100 | 7,100 | 7,900 | 9,100 |
| Operating expenses | 4,100 | 4,300 | 4,700 | 5,100 |
| Income before income taxes | 20,800| 21,600 | 22,400 | 22,800 |
| Income taxes (25%) | 5,200 | 5,400 | 5,600 | 5,700 |
| Net income | $15,600| $16,200| $16,800| $17,100|
### 2020
- **1st Q**
- Sales: $39,000
- Cost of goods sold (LIFO): 10,600
- Operating expenses: 5,300
- Income before income taxes: 23,100
- Income taxes (25%): 5,775
- Net income: $17,325
If the FIFO method had been used since the company began operations, the cost of goods sold in each of the previous quarters would have been:
### 2019
| | 1st Q | 2nd Q | 3rd Q | 4th Q |
|-------|--------|--------|--------|--------|
| Cost of goods sold (FIFO) | 5,900 | 6,700 | 7,300 | 8,100 |
### 2020
- **1st Q**
- Cost of goods sold (FIFO): 9,500
### Additional Information
- Sales for the second quarter of 2020: $41,000
- Cost of goods sold under FIFO:
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