P7-6 Reporting the Statement of Earnings and Cash Flow Effects of Lower of Cost and Net Realizable Value LO7.5 Smart Company prepared its annual financial statements dated Decomber 31, 2020, The compariy opplies the PFO imveritory costing method: however, the company neglected to apply the LC8NRV valuation to the ending invantory. Tha prelititinary 2020 statemert of earnings folows: Assume that you have been asked to restate the 2020 finarcial sissements to incorpsate tho LCs Niv imvericay valustion nule You have developed the following data relating to the ending niventory at Decceribar 31, 2020: Regulred: 1. Aestate the statemert of earrings to retiect the valuation of the ending inventory on December 31, 2020 at the LCaNRNV, Acply the LCever iuin on an eem by litem basis. 2. Compere and explain the LCSNRV effect on each smount that war changed in pant 1. Nogative anawers should bo indicated by 3 minusis sign.) 3. This part of the question is not part of your Comeet assigrment. 4-a. What effect (ncroase, decrease, no effect did the LCsNfN rise have on the cast fow for 2020r No effect Increased Deorensed 4b. What wel be the iong term etfect on cauh flow incroase, docrease, no effoct? Incrensed - becreased No effoct