Homework Seved Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO Inventory costing method but did not compare the cost of its ending Inventory to its market value (replacement cost). The preliminary income statement follows: $134,000 $ 13,500 38,000 Sales Revenue 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 (30%) Net Income 101,500 23,800 77,700 56,300 29,500 26,800 8,040 $ 18,760 cos Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending Inventory Purchase Cost Item A B D Quantity 2,150 700 3,200 2,150 Per Unit $2.70 3.50 1.70 Total $ 5,805 2,450 5,440 10.105 523,800 Replacement Cost per Unit $3.70 1.70 0.85 2.70 Required: 1. Restate the income statement to reflect LCMNRV 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. Required 1 Required 2 Restate the income statement to reflect LCM/NRV valuation of the ending inven es SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue $ 134,000 Cost of Goods Sold: $ 13,500 88,000 101,500 0 Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income 77.700 56,300 29.500 26.800 8.040 Required 2 > 1. Restate the Income statement to reflect LCM/NRV valuation of the ending 2. Compare the LCM/NRV effect on each amount that was changed in the pro 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 1. (Decreases should be indicated by a minus sign.) Item Changed LIFO Cost LCM/NRV Basis Basis Amount of Increase (Decrease) Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income