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 2ndQ $ 22,000 6,000 2017 1stQ $ 28,000 9.500 4,200 1stQ $ 20,000 5,000 T 3,000 12,000 3rdq $ 24,000 6,800 4thQ $ 26,000 8,000 Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (40%) 3,200 $12,800 5,120 $ 7,680 3,600 $ 13,600 5,440 S 8,160 4,000 $ 14,000 5,600 $ 8,400 $ 14,300 5,720 S 8,580 4,800 Net income S 7,200 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 3rdQ $6,200 2017 1stQ $ 8,400 4thQ $7,000 1stQ $4,800 2ndQ $5,600 Cost of goods sold (FIFO) Sales for the second quarter of 2017 are $30,000, cost of goods sold under the FIF0 method is $10,000, and operating expenses are $4.400. The effective tax rate remains 40 percent. Combi Company has 1,000 sheres of common stock outstanding Prepare a schedule showing the calculation of net income and earnings per share thet Cambi reports for the three-month period and the six-month period ended June 30, 2017 (Round "Earnings per shere" answers to 2 decimal places.) Three Months Ended June 30 Six Months Ended June 30 2016 2017 2016 2017

Answer 1

Calulation of net income and Earning per share for three months period ended June 30 2017:
Particulars	Amount $
Sales_2nd quarter	30000
COGS_FIFO	10000
Operating expenses	4400
Income before income taxes	15600
Income tax@40%	6240
Net income	9360
Common stock outstanding	1000
Earning per share	9.36
Note: The Above COGS is based on FIFO
Calulation of net income and Earning per share for Six months period ended June 30 2017:
Particulars	Amount_1st quarter	Amount_2nd quarter	Total
Sales	28000	30000	58000
COGS_FIFO	8400	10000	18400
Operating expenses	4200	4400	8600
Income before income taxes	15400	15600	31000
Income tax@40%	6160	6240	12400
Net income	9240	9360	18600
Common stock outstanding	1000	1000	1000
Earning per share	9.24	9.36	18.6
Note: The Above COGS is based on FIFO