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 1stQ $ 22,000 Cost of goods sold (FIFO) 5,200 3,200 $ 13,600 3,400 $ 10, 200 2ndQ $ 24,000 6,200 3,400 $ 14,400 3,600 $ 10,800 2019 3rdQ $ 26,000 7,000 3,800 $ 15,200 3,800 $ 11,400 2019 4thQ $ 28,000 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: 1stQ 2ndQ 3rdQ $5,000 $5,800 $ 6,400 8,200 4,200 $ 15,600 3,900 $ 11,700 2020 1stQ $ 30,000 9,700 4,400 $ 15,900 3,975 $ 11,925 4thQ $ 7,200 2020 1stQ $8,600 Sales for the second quarter of 2020 are $32,000, cost of goods sold under the FIFO method is $10,200, and operating expenses are $4,600. 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.)
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 1stQ $ 22,000 Cost of goods sold (FIFO) 5,200 3,200 $ 13,600 3,400 $ 10, 200 2ndQ $ 24,000 6,200 3,400 $ 14,400 3,600 $ 10,800 2019 3rdQ $ 26,000 7,000 3,800 $ 15,200 3,800 $ 11,400 2019 4thQ $ 28,000 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: 1stQ 2ndQ 3rdQ $5,000 $5,800 $ 6,400 8,200 4,200 $ 15,600 3,900 $ 11,700 2020 1stQ $ 30,000 9,700 4,400 $ 15,900 3,975 $ 11,925 4thQ $ 7,200 2020 1stQ $8,600 Sales for the second quarter of 2020 are $32,000, cost of goods sold under the FIFO method is $10,200, and operating expenses are $4,600. 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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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
1stQ
$ 22,000
5,200
3,200
$ 13,600
3,400
$ 10, 200
Cost of goods sold (FIFO)
2ndQ
$ 24,000
6,200
3,400
$ 14,400
3,600
$ 10,800
2019
3rdQ
$ 26,000
7,000
3,800
$ 15,200
3,800
$ 11,400
2019
4thQ
$ 28,000
8,200
4, 200
$15,600
3,900
$ 11,700
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:
1stQ
2ndQ
3rdQ
$ 5,000 $ 5,800 $ 6,400
2020
1stQ
$ 30,000
4thQ
$ 7,200
9,700
4,400
$ 15,900
3,975
$ 11,925
2020
1stQ
$ 8,600
Sales for the second quarter of 2020 are $32,000, cost of goods sold under the FIFO method is $10,200, and operating expenses are
$4,600. 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.)
Transcribed Image Text:Net income
Net income per common share
Three Months Ended
June 30
2019
2020
Six Months Ended
June 30
2019
2020
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