Answered step by step
Verified Expert Solution
Question
1 Approved Answer
7 Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did
7 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: $144,000 13 points $ 16,000 93,000 eBook 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 (30%) Net Income 109,000 24,580 Print 84,420 59,580 32,000 27,580 8,274 $ 19,306 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 A B D Quantity 1,600 750 3,700 1,600 Per Unit $3.20 4.00 2.20 5.20 Total $ 5,120 3,000 8,140 8,320 $24,580 Replacement Cost per Unit $ 4.20 2.20 1.10 3.20 Required: 7 1. Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. 2. Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1. 13 points Complete this question by entering your answers in the tabs below. eBook Required 1 Required 2 Print Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LC basis. SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue $ 144,000 Cost of Goods Sold: Beginning Inventory $ 16,000 Purchases 93,000 Goods Available for Sale 109,000 Ending Inventory Cost of Goods Sold Gross Profit Restate the income statement to reflect LCM/NRV valuation of basis. 7 13 points eBook SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue $ 144,000 Cost of Goods Sold: Beginning Inventory $ 16,000 Purchases 93,000 Goods Available for Sale 109,000 Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income Print Required 1 Complete this question by entering your answers in the tabs below. 7 Required 1 Required 2 13 points Compare the LCM/NRV effect on each amount that was changed in the preliminary income sta 1. (Decreases should be indicated by a minus sign.) eBook Item Changed LIFO Cost LCM/NRV Basis Basis Amount of Increase (Decrease) Print Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started