PA7-2 (Algo) Evaluating the Income Statement and Income T= Realizable Value [LO 7-4) Springer Anderson Gymnastics prepared its annual financial statements dated the LIFO inventory costing method but did not compare the cost of its ending in preliminary income statement follows: $ 158,000 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 $ 19,500 100,000 119,500 35,270 84,230 73, 770 35,500 38,270 11,481 $ 26,789 Assume that you have been asked to restate the financial statements to incorporate following data relating to the ending inventory: Item Quantity 1,950 800 Purchase Cost Replacement Cost per Per Unit Total Unit $ 3.90 $ 7,685 $. 4.90 4.25 2.90 A B 3,400 ome Statement and Income Tax Effects of Lower of Cost or Market/Net bits annual financial statements dated December 31. The company reported its inventory using lid not compare the cost of its ending inventory to its market value (replacement cost). The $ 158,000 $ 19,500 100,000 119,500 35,270 84,230 73,770 35,500 38,270 11,481 $ 26,789 estate the financial statements to incorporate the LCM/NRV rule. You have developed the ventory: est btal 7,605 3,400 Replacement Cost per Unit $ 4.90 2.90 Purchase Cost Replacement Item Cost per A C D Quantity 1,950 800 4,400 1,950 Per Unit $ 3.90 4.25 2.90 5.90 Total Unit $ 7,685 $ 4.90 3,400 2.90 12,760 1.45 11,50 3.90 $ 35,270 Required: 1. Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item 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 LIFO Cost LCM/NRV Basis Basis 35.2707 Amount of Increase (Decrease) Ending Inventory 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 invento $ 158,000 SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue Cost of Goods Sold Beginning Inventory $ 19,500 Purchases 100,000 Goods Available for Sale 119.500 Ending Inventory 35,270 Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income 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 state 1. (Decreases should be indicated by a minus sign.) Item Changed LIFO Cost Basis LCM/NRV Basis Amount of Increase (Decrease) $ 35,270 Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income