Jaffa Company prepared its annual financial statements dated December $31$ of the current year. The company applies the FIFO

inventory costing method; however, the company neglected to apply lower of cost or net realizable value to the ending inventory. The

preliminary current year income statement follows:

Assume that you have been asked to restate the current year financial statements to incorporate lower of cost or NRV$.$ You have

developed the following data relating to the current year ending inventory:

Required:

Prepare the income statement to reflect lower of cost or net realizable value valuation of the current year ending inventory.

Apply lower of cost or NRV on an item$-$by$-$item basis.

Compare the lower of cost or net realizable value effect on each amount that was changed on the income statement in

requirement $(1).$