13. 198 1.96 points Smart Company prepared its annual financial statements dated December 31, 2013. The company used the FIFO inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary 2013 income statement follows: Sales Revenue Cost of Goods Sold $300,000 Beginning Inventory Purchases $ 40,000 202,000 Goods Available for Sale Ending Inventory (FIFO cost) 242,000 76,800 Cost of Goods Sold 165,200 Gross Profit Operating Expenses 134,800 71,000 Income from Operations Income Tax Expense (30%) 63,800 19,140 Net Income $ 44,660 TIP: Inventory write-downs do not affect the cost of goods available for sale. Instead, the effect of the write- down is to reduce ending inventory, which increases Cost of Goods Sold and then affects other amounts re lower in the income statement CM. You have Assume that you have been asked to restate the 2013 financial statements to incorporate L developed the following data relating to the 2013 ending inventory: Current Replacement Purchase Cost_Cost per Unit Item Quantity Per Unit Total (Market) $5 2,900 1,900 8,000 3,100 $ 11,600 13,300 24,000 27,900 $76,800 Required 1. Restate the income statement to reflect LCM valuation of the 2013 ending inventory. Apply LCM on an item-by-item basis SMART COMPANY Income Statement (LCM basis) For the Year Ended December 31, 2013 Sales Revenue $300,000 Cost of Goods Sold $ 40,000 202,000 242,000 76,000 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