Question: Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information is available:

Assuming Baker makes the change in the first quarter of 2011 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2011? Please provide detailed calculation.
A. $400,000.
B. $405,200.
C. $427,950.
D. $894,850.
E. $905,200.

Cost ofgoods sold Cost of goods sold After-tax FIFO LIFO Difference Difference S22.750 S 5.200 Prior to 2011 ls quarter 2011 Net income before effect of accounting change Is quarter 2010 It quarter 2011 S 40,000 S 10,000 $75,000 S18,000 $35,000 S 8,000 $300,000 S500,000

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