Compare and explain the LCM/NRV effect on each amount in the income statement that was changed im requirements one.

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: Sales Revenue Cost of Goods Sold $314,000 Beginning Inventory Purchases $47,008 216,900 263,000 175.600 Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income 87,400 226,600 78,000 148,600 44,580 $104,028 Assume you have been asked to restate the financial statements to incorporate LCMNRV. You have developed the following data relating to the ending inventory Purchase Cost Per tem Quantity Uni Net Realizable Total Value per Unit A 3,680 $11 39,688 B 2,000 8 16,eee C 8,786 1 87,e 33,800 $175,68e s 12 6 12 D 3,380 1 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