1. restate the income statement to reflect LCM/MRV valuation of the ending inventory. Apply LCM/MRV on an iteam-by-iteam basis.

2.Compare the LCM/MRV effect on each amount that was changed in the preliminary income statement in requirement 1.

N Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows: Sales Revenue Goat of Goods Sold Beginning Inventory Purchase Goods Available for Sale Ending Inventory Coat of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (201) Net Income 121,000 38,140 2.860 36,000 01.140 8,228 $ 32,912 Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending Inventory Purchase Cost Item Quantity 2,000 800 4.500 2,000 Per Unit $4.00 5.80 Replacement Cost per Unit $5.00 2.90 Total $8,000 4.640 13.500 12.000 338.140 ending inventory. Apply LCM/NRV on an item-by-item basis. Restate the income statement to reflect LCM/NRV valuation of the SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1. (Decreases should be indicated by a minus sign.) Item Changed LIFO Cost LCMNRV Basis Basis Amount of Increase (Decrease) Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income