Volata Company began operations on January $1,2023.$ In the second quarter of $2024,$ 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:

Accounts $20232024$

$1$st Quarter $2$nd Quarter $3$rd Quarter $4$th Quarter $1$st Quarter

Sales $ $24,000$ $ $26,000$ $ $28,000$ $ $30,000$ $ $32,000$

Cost of goods sold $($LIFO$)5,4006,4007,2008,4009,900$

Operating expenses $3,4003,6004,0004,4004,600$

Income before income taxes $ $15,200$ $ $16,000$ $ $16,800$ $ $17,200$ $ $17,500$

Income taxes $(25\%)3,8004,0004,2004,3004,375$

Net income $ $11,400$ $ $12,000$ $ $12,600$ $ $12,900$ $ $13,125$

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:

Accounts $20232024$

$1$st Quarter $2$nd Quarter $3$rd Quarter $4$th Quarter $1$st Quarter

Cost of goods sold $($FIFO$)$ $ $5,200$ $ $6,000$ $ $6,600$ $ $7,400$ $ $8,800$

Sales for the second quarter of $2024$ are $$34,000,$ cost of goods sold under the FIFO method is $$10,400,$ and operating expenses are $$4,800.$ The effective tax rate remains $25$ percent. Volata Company has $1,000$ shares of common stock outstanding.

 

 

Required:

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 $30,2023$ and $2024.$

Answer rating: 100% (QA)

Schedule Calculation of Net Income and Earnings per Share ThreeMonth Period Ended Jun... View the full answer