Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of invento
Posted: Fri Jul 01, 2022 8:44 am
Volata Company began operations on January 1, 2019. In thesecond quarter of 2020, it adopted the FIFO method of inventoryvaluation. In the past, it used the LIFO method. The company’sinterim income statements as originally reported under the LIFOmethod follow:
If the FIFO method had been used since the company beganoperations, cost of goods sold in each of the previous quarterswould have been as follows:
Sales for the second quarter of 2020 are $42,000, cost of goodssold under the FIFO method is $11,200, and operating expenses are$5,600. The effective tax rate remains 25 percent. Volata Companyhas 1,000 shares of common stock outstanding.
Prepare a schedule showing the calculation of net income andearnings per share that Volata reports for the three-month periodand the six-month period ended June 30, 2020. (Round"Earnings per share" answers to 2 decimal places.)
If the FIFO method had been used since the company beganoperations, cost of goods sold in each of the previous quarterswould have been as follows:
Sales for the second quarter of 2020 are $42,000, cost of goodssold under the FIFO method is $11,200, and operating expenses are$5,600. The effective tax rate remains 25 percent. Volata Companyhas 1,000 shares of common stock outstanding.
Prepare a schedule showing the calculation of net income andearnings per share that Volata reports for the three-month periodand the six-month period ended June 30, 2020. (Round"Earnings per share" answers to 2 decimal places.)