A. Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis.

B. Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement A.

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 Cost of Goods Sold $126,000 Beginning Inventory $11,500 84,000 Purchases Goods Available for Sale 95,500 21,400 Ending Inventory 74,100 51,900 27,500 24,400 9,760 $ 14,640 Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (40%) Net Income 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 Replacement Cost per Unit $3.30 1.40 0.70 2.30 Item Quantity 2,350 750 2,800 2,350 Per Unit $2.30 3.00 1.30 4.30 Total $5,405 2,250 3,640 10,105 $21,400