Question

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	$	22,000			$	24,000			$	26,000			$	28,000			$	30,000
Cost of goods sold (LIFO)		5,200				6,200				7,000				8,200				9,700
Operating expenses		3,200				3,400				3,800				4,200				4,400
Income before income taxes	$	13,600			$	14,400			$	15,200			$	15,600			$	15,900
Income taxes (40%)		5,440				5,760				6,080				6,240				6,360
Net income	$	8,160			$	8,640			$	9,120			$	9,360			$	9,540

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)	$	5,000			$	5,800			$	6,400			$	7,200			$	8,600

Sales for the second quarter of 2017 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 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.)

Answer 1

Schedule Showing Net Income and Earning per share
	Three Month Ended for June30,2017	Six Month Ended for June 30, 2017
Net Income	$10,320	$20,520
Earning Per share	$10.32	$20.52

	2016				2017
	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	1st Qtr	2nd Qtr	Six Month
Sales	$22,000	$24,000	$26,000	$28,000	$30,000	$32,000	$62,000
Less: Cost of Goods Sold	$5,000	$5,800	$6,400	$7,200	$8,600	$10,200	$18,800
Less: Operating expense	$3,200	$3,400	$3,800	$4,200	$4,400	$4,600	$9,000
Income Before Income Tax	$13,800	$14,800	$15,800	$16,600	$17,000	$17,200	$34,200
Less: Income Tax(40%)	$5,520	$5,920	$6,320	$6,640	$6,800	$6,880	$13,680
Net Income	$8,280	$8,880	$9,480	$9,960	$10,200	$10,320	$20,520
No. of Outstanding Share	1000	1000	1000	1000	1000	1000	1000
Earning Per share	$8.28	$8.88	$9.48	$9.96	$10.20	$10.32	$20.52