{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-05-21T21:08:43-04:00", "answer_date": "2024-05-21 21:08:43", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "1474578", "url": "\/study-help\/questions\/pa72-algo-evaluating-the-income-statement-and-income-tax-effects-1474578", "question_creation_date_js": "2024-05-21T21:08:43-04:00", "question_creation_date": "May 21, 2024 09:08 PM", "meta_title": "[Solved] PA7-2 (Algo) Evaluating the Income Statem | SolutionInn", "meta_description": "Answer of - PA7-2 (Algo) Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market\/Net Realizable Value (L | SolutionInn", "meta_keywords": "pa7-2,algo,evaluating,income,statement,tax,effects,lower,cost,market\/net,realizable,value", "question_title_h1": " PA7-2 (Algo) Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market\/Net Realizable Value (LO 7-4] Springer Anderson Gymnastics prepared", "question_title": " PA7-2 (Algo) Evaluating the Income Statement and Income Tax Effects of", "question_title_for_js_snippet": "PA7 2 (Algo) Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market Net Realizable Value (LO 7 4 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 Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Bold Gross Profit Operating Expenses Income from Operations $124,000 $11,000 3,000 94,000 20,700 23,300 50,700 27,000 23 700 Income Tax Expense (354) Net Income 4,295 $15,405 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 Iten Quantity Per Unit c D 2,400 700 2,700 2,400 $2 20 Total $ 5,280 Replacement Cost per Unit $3 20 3 00 1 20 4 20 2,100 3,240 10,080 1 20 2 20 $ 20,700 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 LIFO Cost Basis LCM NRV Basis Amount of increase (Decrease Ending Inventory $ 20 700 Cost of Goods Sold $ 73,300 Gross Profit $ 50,700 Income from Operations $ 23 700 Income Tax Expense $8 295 Net income", "question_description": "\"image", "transcribed_text": "PA7-2 (Algo) Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market\/Net Realizable Value (LO 7-4] 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: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Bold Gross Profit Operating Expenses Income from Operations $124,000 $11,000 3,000 94,000 20,700 23,300 50,700 27,000 23.700 Income Tax Expense (354) Net Income 4,295 $15,405 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 Iten Quantity Per Unit c D 2,400 700 2,700 2,400 $2.20 Total $ 5,280 Replacement Cost per Unit $3.20 3.00 1.20 4:20 2,100 3,240 10,080 1.20 2.20 $ 20,700 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 LIFO Cost Basis LCM\/NRV Basis Amount of increase (Decrease Ending Inventory $ 20.700 Cost of Goods Sold $ 73,300 Gross Profit $ 50,700 Income from Operations $ 23.700 Income Tax Expense $8.295 Net income", "related_book": { "title": "Accounting Principles", "isbn": "1119491630, 978-1119491637, 978-0470534793", "edition": "10th Edition", "authors": "Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/54.jpg", "uri": "\/textbooks\/accounting-principles-10th-edition-54", "see_more_uri": "" }, "free_related_book": { "isbn": "0471879630", "uri": "\/textbooks\/taxation-of-residence-transactions-1st-edition-9780471879633-238251", "name": "Taxation Of Residence Transactions", "edition": "1st Edition" }, "question_posted": "2024-05-21 21:08:43", "see_more_questions_link": "\/study-help\/questions\/business-management-leadership-2023-June-05", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/questions\/the-last-two-decades-have-taught-us-that-when-it-658011", "description": "The last two decades have taught us that when it comes to financial deregulation, it is possible to have too much of a good thing too quickly. Financial deregulation has often taken place...", "stars": 0 }, { "url": "\/given-the-following-over-what-range-of-values-of-marr-is", "description": "Given the following: Over what range of values of MARR is Y the preferred alternative? Year S10 +28 2 8 -15", "stars": 3 }, { "url": "\/study-help\/implementing-programming-languages\/4-design-a-finite-state-machine-that-outputs-1-when-1842962", "description": "=+4. Design a finite state machine that outputs 1 when it sees 101 and thereafter; otherwise outputs 0 .", "stars": 3 }, { "url": "\/study-help\/coaching-supervision-a-practical-guide-for-supervisees\/write-down-five-adjectives-that-come-to-mind-when-you-1980246", "description": "Write down five adjectives that come to mind when you think about sickabsent employees. Compare your list with those of a few fellow students. Which adjectives occur most across your lists? Is this...", "stars": 3 }, { "url": "\/for-each-of-the-following-entries-enter-the-letter-of", "description": "For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record receipt of...", "stars": 3 }, { "url": "\/study-help\/questions\/you-are-provided-the-following-information-about-three-stocks-on-9794284", "description": "You are provided the following information about three stocks on a stand alone basis Expected Standard Riskless Stock Return Deviation Return 10% 20% 3.50% 12% 25% 3.50% 14% 16% 3.50% B Calculate the...", "stars": 3 }, { "url": "\/study-help\/questions\/kathy-hutton-chief-executive-officer-of-summit-distributors-was-concerned-with-the-151241", "description": "Kathy Hutton, chief executive officer of Summit Distributors, was concerned with the poor economic outlook for the coming year. Continued deterioration of the economy could place the future viability...", "stars": 3 }, { "url": "\/study-help\/questions\/the-following-information-is-available-from-rubys-financial-records-as-917246", "description": "The following information is available from Ruby's financial records as at December 1, 2022. Cash $25,000 Furniture 8,000 Content of Home 5,000 House 300,000 Line of Credit 45,000 Mortgage 285,000...", "stars": 3 }, { "url": "\/study-help\/questions\/review-very-carefully-property-2-in-the-definition-of-norm-5346305", "description": "Review very carefully property 2 in the Definition of norm ( you might also want to listen carefully to the presenter ) , then answer the following question: True \/ False: \\ | \\ alpha \\ mathbf { v }...", "stars": 3 }, { "url": "\/study-help\/questions\/who-are-netflix-s-competitors-and-why-would-they-be-1002470", "description": "Who are Netflix s competitors and why would they be likely to take action against Netflix? Include the role of market commonality and resource similarities. Why does Netflix appear to have a...", "stars": 3 }, { "url": "\/study-help\/questions\/as-shown-in-figure-114-the-rotatable-dump-is-connected-1024029", "description": "As shown in [Figure 1-14], the rotatable dump is connected to the truck's bed by a hinge at the support point C and supported by the hydraulic cylinder AB . The weight of the dump is 5 [kN], and the...", "stars": 3 }, { "url": "\/study-help\/questions\/the-present-value-of-a-future-amount-was-calculated-to-4474596", "description": "The present value of a future amount was calculated to be R207,54 at a discount rate of 5% and the present value of the same future amount was calculated to be R183,30 at a discount rate of 6%. Use...", "stars": 3 }, { "url": "\/study-help\/questions\/use-the-data-from-the-following-file-fishcsv-table-pasted-1299373", "description": "Use the data from the following file (Fish.csv) table pasted below for running linear regression. Weight Length1 Length2 Length3 Height Width 242 23.2 25.4 30 11.52 4.02 290 24 26.3 31.2 12.48 4.3056...", "stars": 3 }, { "url": "\/study-help\/questions\/stephanie-was-injured-in-a-car-accident-and-was-rushed-8678165", "description": "Stephanie was injured in a car accident and was rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger. Under Stephanie's PPO plan, emergency room...", "stars": 3 }, { "url": "\/study-help\/questions\/explain-answer-x2-x4-if-a-x2-and-a1-212786", "description": "-x\/2 x\/4 If A = -x\/2 and A-1 =6 then x equals", "stars": 3 }, { "url": "\/study-help\/essentials-managerial-finance\/a-why-is-it-difficult-to-calculate-the-payback-period-1758589", "description": "=+a. Why is it difficult to calculate the payback period for this project?", "stars": 3 }, { "url": "\/study-help\/essentials-managerial-finance\/b-calculate-the-investments-net-present-value-npv-at-each-1758588", "description": "=+b. Calculate the investments net present value (NPV) at each of the following discount rates: 0%, 5%, 10%, 15%, 20%, 25%, 30%, and 35%.", "stars": 3 }, { "url": "\/study-help\/essentials-managerial-finance\/d-draw-the-net-present-value-profiles-for-each-store-1758593", "description": "=+d. Draw the net present value profiles for each store on the same set of axes, and discuss any conflict in ranking that may exist between NPV and IRR.", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/imlost-on-the-inputs-cullumber-company-entered-into-these-transactions-1474577", "next": "\/study-help\/questions\/0-required-information-the-following-information-applies-to-the-questions-1474579" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": " PA7-2 (Algo) Evaluating the Income Statement and Income Tax Effects of", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/pa72-algo-evaluating-the-income-statement-and-income-tax-effects-1474578" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } } } }