2 Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows 20 points Sales Revenue Cost of Goods Sold $296,000 Beginning Inventory Purchases $ 38,000 198,000 236,e00 131,9e0 Goods Available for Sale Ending Inventory elook Cost of Goods Sold 104 1 Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income 191,9ee 69,000 122,900 36,870 86,030 Print References Assume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the foliowing data relating to the ending inventory Purchase CostNet Realizable Quantity Per Unit Total Value per Unit 2,700 1,700 7,800 3,4007 s 8 s 21,600 8,500 78,000 23,800 $131,90e s 9 10 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 in the income statement