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 $ 29,000 $ 31,000 $ 33,000 $ 35,000 $ 37,000 Cost of goods sold (LIFO) 5,900 6,900 7,700 8,900 10,400 Operating expenses 3,900 4,100 4,500 4,900 5,100 Income before income taxes $ 19,200 $ 20,000 $ 20,800 $ 21,200 $ 21,500 Income taxes (25%) 4,800 5,000 5,200 5,300 5,375 Net income $ 14,400 $ 15,000 $ 15,600 $ 15,900 $ 16,125 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) $ 5,700 $ 6,500 $ 7,100 $ 7,900 $ 9,300 Sales for the second quarter of 2020 are $39,000, cost of goods sold under the FIFO method is $10,900, and operating expenses are $5,300. 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 Ended June 30 Six Months Ended June 30 2019 2020 2019 2020 Net income Net income per common share

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

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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	$	29,000		$	31,000		$	33,000	$	35,000	$	37,000
Cost of goods sold (LIFO)		5,900			6,900			7,700		8,900		10,400
Operating expenses		3,900			4,100			4,500		4,900		5,100
Income before income taxes	$	19,200		$	20,000		$	20,800	$	21,200	$	21,500
Income taxes (25%)		4,800			5,000			5,200		5,300		5,375
Net income	$	14,400		$	15,000		$	15,600	$	15,900	$	16,125

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)	$	5,700		$	6,500		$	7,100	$	7,900	$	9,300

Sales for the second quarter of 2020 are $39,000, cost of goods sold under the FIFO method is $10,900, and operating expenses are $5,300. 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 Ended June 30		Six Months Ended June 30
2019	2020	2019	2020
Net income
Net income per common share

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