Mondetta Clothing prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to evaluate the net realizable value of its ending inventory. The preliminary income statement follows: $438,000 $ 49,500 282,000 331,500 99,840 Net Sales 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 (40%) Net Income 231,660 206,340 97,500 108,840 43,536 $ 65,304 Assume that you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory: Acquisition Cost Item Quantity 3,900 1,950 7,900 3,900 CA Per Unit $5.40 7.80 3.90 8.40 Net Realizable Value per Unit $6.90 3.90 6.90 5.40 Total $21,060 15,210 30,810 32,760 $99,840 Required: 1. Restate the income statement to reflect LCM/NRV 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. Restate the income statement to reflect LCM/NRV 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. MONDETTA CLOTHING Income Statement (LCM/NRV basis) For the Year Ended December 31 Net Sales $ 438,000 Cost of Goods Sold: Beginning Inventory $ 49,500 Purchases 282,000 Goods Available for Sale [ 331,500 Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income Required: 1. Restate the income statement to reflect LCM/NRV 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. 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 income statement in requirement 1. (Decreases should be indicated by a minus sign.). Item Changed FIFO 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 Required 1 Required 2