Harvey Company prepared its annual financial statements dated December 31, 2011. The company applies the FIFO inventory costing method; however, the company neglected to apply LCM to the ending inventory. The preliminary 2011 income statement follows: Sales revenue $ 289,000 Cost of goods sold Beginning inventory $ 33,900 Purchases 193,000 Goods available for sale 226,900 Ending inventory (FIFO cost) 61,584 Cost of goods sold 165,316 Gross profit 123,684 Operating expenses 62,900 Pretax income 60,784 Income tax expense (30%) 18,235 Net income $ 42,549 Assume that you have been asked to restate the 2011 financial statements to incorporate LCM. You have developed the following data relating to the 2011 ending inventory: Acquisition Cost Current Replacement Unit Cost Item Quantity Unit Total (Market) A 3,140 $ 3.9 $ 12,246 $ 4.9 B 1,590 5.9 9,381 4.4 C 7,190 2.4 17,256 4.4 D 3,290 6.9 22,701 4.9 $ 61,584 3. value: 5.00 points Required information Required: 1. Prepare the income statement to reflect LCM valuation of the 2011 ending inventory. Apply LCM on an item-by-item basis and show Computations. (Input all amounts as positive values. Omit the "$" sign in your response. Round your final answers to the nearest whole dollar amount.) HARVEY COMPANY Income Statement (LCM basis) For the Year Ended December 31, 2011 $ Cost of goods sold: $ Cost of goods sold Pretax income $ References WorksheetDifficulty: HardLearning Objective: 07-04 Report inventory at the lower of cost or market (LCM). 4. value: 5.00 points Required information 2. Compare the LCM effect on each amount that was changed on the income statement in requirement (1). (Negative amounts should be indicated by a minus sign. Round your final answers to the nearest whole dollar amount. Omit the "$" sign in your response.) Item Changed FIFO Cost Basis LCM Basis Amount of Change (Decrease) Ending inventory $ $ $ Cost of goods sold Gross profit Pretax income Income tax expense Net income References WorksheetDifficulty: Hard