Volata Company began operations on January 1, 2019. In the second quarter of 2020, 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: 2019 2020 1stQ 2ndQ 3rdQ 4thQ 1stQ Sales $ 21,000 $ 23,000 $ 25,000 $ 27,000 $ 29,000 Cost of goods sold (LIFO) 5,100 6,100 6,900 8,100 9,600 Operating expenses 3,100 3,300 3,700 4,100 4,300 Income before income taxes $ 12,800 $ 13,600 $ 14,400 $ 14,800 $ 15,100 Income taxes (25%) 3,200 3,400 3,600 3,700 3,775 Net income $ 9,600 $ 10,200 $ 10,800 $ 11,100 $ 11,325 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 2ndQ 3rdQ 4thQ 1stQ Cost of goods sold (FIFO) $ 4,900 $ 5,700 $ 6,300 $ 7,100 $ 8,500 Sales for the second quarter of 2020 are $31,000, cost of goods sold under the FIFO method is $10,100, and operating expenses are $4,500. 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.) Three Months Six Month Ended June 30 Ended June 30 2019 2020 2019 2020 Net Income Net Income Per Common Share

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Volata Company began operations on January 1, 2019. In the second quarter of 2020, 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:

	2019		2020
	1stQ		2ndQ	3rdQ		4thQ	1stQ
Sales	$	21,000		$	23,000		$	25,000	$	27,000	$	29,000
Cost of goods sold (LIFO)		5,100			6,100			6,900		8,100		9,600
Operating expenses		3,100			3,300			3,700		4,100		4,300
Income before income taxes	$	12,800		$	13,600		$	14,400	$	14,800	$	15,100
Income taxes (25%)		3,200			3,400			3,600		3,700		3,775
Net income	$	9,600		$	10,200		$	10,800	$	11,100	$	11,325

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		2ndQ	3rdQ		4thQ	1stQ
Cost of goods sold (FIFO)	$	4,900		$	5,700		$	6,300	$	7,100	$	8,500

Sales for the second quarter of 2020 are $31,000, cost of goods sold under the FIFO method is $10,100, and operating expenses are $4,500. 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.)

		Three	Months	Six	Month
		Ended	June 30	Ended	June 30
		2019	2020	2019	2020
Net	Income
Net Income	Per Common Share

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