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$410,000 $ 42,500 268. eee 319,5ee se, eee Net Sales 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 (40%) Net Income 260, 500 149,500 90, see 59, Bee 23, 60e $ 35, 40e Assume that you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory Acquisition Cost Item Quantity 2,500 1,250 6,500 2,580 DUO Per Unit $4.00 5.00 2.50 7.00 Net Realizable Value per Unit $5.58 2.58 5.58 4.ee Total $10,000 6,250 16,258 17,500 $50,000 Required: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. MONDETTA CLOTHING Income Statement (LCM/NRV basis) For the Year Ended December 31 Net Sales $ 410,000 Cost of Goods Sold: Beginning Inventory $ 42,500 Purchases 268.000 Goods Available for Sale 310,500 Ending Inventory 50.000 Cost of Goods Sold 260.500 Gross Profit 149,500 Operating Expenses 90.500 Income from Operations 59.000 Income Tax Expense Net Income Mondetta Clothing prepared its annual financial statements dated December 31. The company used the FIFO Inventory costing method, but it failed to evaluate the net realizable value of its ending Inventory. The preliminary Income statement follows: $410, $ 42,500 268,000 310,500 50.000 Net Sales 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 (40%) Net Income 260, see 149,500 99,500 59, eee 23, 688 $ 35,400 Assume that you have been asked to restate the financial statements to Incorporate LCM/NRV. You have developed the following data relating to the ending Inventory: Acquisition Cost Item Quantity 2,500 1,250 6,589 2,500 Per Unit $4.00 5.ee 2.50 7.60 Total $12, eee 6,250 16,25 17,500 $5e,eee Net Realizable Value per Unit $5.50 2.50 5.5e 4.ee Required: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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 FIFO Cost LCM/NRV Basis Basis Increase (Decrease) Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income