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7. value: 17.00 points Smart Company prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary income statement follows $310,000 Sales Revenue Cost of Goods Sold Beginning Inventory Purchases $ 45,000 212,000 Goods Available for Sale Ending Inventory (FIFO cost) 257,000 134,200 Cost of Goods Sold 122,800 Gross Profit Operating Expenses 187,200 76,000 Income from Operations Income Tax Expense (30%) 111,200 33,360 Net Income $ 77,840 Assume that you have been asked to restate the financial statements to incorporate LCM. You have developed the following data relating to the ending inventory: Market Value per Unit $10 Purchase Cost Total Item Quantity Per Unit 3,400 1,800 8,500 3,100 $30,600 10,800 68,000 24,800 6 4 $134,200 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 reported lower in the income statement. Required