Chapter 7 Homework 7 Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO Inventory costing method and falled to evaluate its net realizable value at December 31. The prelliminary Income statement follows Cost of Goods Sold Deginming Inventory Goods Avai Ending Inventory Gross Profit Operating Expenses tneone fron Operations Enoone Tax Expense (300 44,660 Assume you have been asked to restate the inancial statements to incorporate LC/NRV. You have developed the foilowing dats relating to the endling inventory Net Realizable ,380 24,000 27-908 10p irventory write-downs do not affect the cost of goods avalable for sale. Instead, the effect of the writedown is to reduce ending nventory, which increases Cost of Goods Sold and then affects oher amounts in the income statement 1 Restate the income statement to reflect LCM/NRV valuation of the ending inventory Apply LCWNRV on an item-by-item basis 2. Compare and explain the LCM/NRV effect on each amount in the income statement that was changed in requirement 1 MacBook Air 4 0