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: Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (25%) Net income Cost of goods sold (FIFO) 1stQ $ 26,000 5,600 3,600 Net income Net income per common share $ 16,800 4,200 $ 12,600 2019 2ndQ $ 28,000 6,600 3,800 $ 17,600 4,400 $ 13,200 1stQ 2ndQ $5,400 $ 6,200 Three Months Ended June 30 2019 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: 2020 3rdQ $ 30,000 7,400 4, 200 $ 18,400 4,600 $ 13,800 2019 4thQ $ 32,000 8,600 4,600 $ 18,800 4,700 $ 14,100 4thQ 3rdQ $ 6,800 $ 7,600 Sales for the second quarter of 2020 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 25 percent. Volata Company has 1,000 shares of common stock outstanding. 2020 1stQ $ 34,000 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.) Six Months Ended June 30 2019 2020 10, 100 4,800 $ 19,100 4,775 $ 14,325 2020 1stQ $9,000
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: Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (25%) Net income Cost of goods sold (FIFO) 1stQ $ 26,000 5,600 3,600 Net income Net income per common share $ 16,800 4,200 $ 12,600 2019 2ndQ $ 28,000 6,600 3,800 $ 17,600 4,400 $ 13,200 1stQ 2ndQ $5,400 $ 6,200 Three Months Ended June 30 2019 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: 2020 3rdQ $ 30,000 7,400 4, 200 $ 18,400 4,600 $ 13,800 2019 4thQ $ 32,000 8,600 4,600 $ 18,800 4,700 $ 14,100 4thQ 3rdQ $ 6,800 $ 7,600 Sales for the second quarter of 2020 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 25 percent. Volata Company has 1,000 shares of common stock outstanding. 2020 1stQ $ 34,000 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.) Six Months Ended June 30 2019 2020 10, 100 4,800 $ 19,100 4,775 $ 14,325 2020 1stQ $9,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ajay
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. In the past, it used the LIFO method. The company's interim
income statements as originally reported under the LIFO method follow:
Sales
Cost of goods sold (LIFO)
Operating expenses
Income before income taxes
Income taxes (25%)
Net income
Cost of goods sold (FIFO)
1stQ
$ 26,000
5,600
3,600
$ 16,800
4, 200
$ 12,600
Net income
Net income per common share
2ndQ
$ 28,000
6,600
3,800
$ 17,600
4,400
$ 13,200
2ndQ
1stQ
$ 5,400 $ 6,200
2019
Three Months Ended
June 30
2019
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:
2020
3rdQ
$ 30,000
2019
7,400
4,200
$ 18,400
4,600
$ 13,800
4thQ
$ 32,000
8,600
4,600
$ 18,800
4,700
$ 14,100
3rdQ
4thQ
$ 6,800 $ 7,600
Sales for the second quarter of 2020 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 25 percent. Volata
Company has 1,000 shares of common stock outstanding.
2020
1stQ
$ 34,000
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.)
10, 100
4,800
$ 19,100
4,775
$ 14,325
Six Months Ended
June 30
2019
2020
2020
1stQ
$9,000
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