PA7-2 Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market LO 7-4] Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary income statement follows Sales Revenue Cost of Goods Sold $128,000 Beginning Inventory Purchases $12,000 85,000 Goods Available for Sale Ending Inventory (FIFO cost) 97,000 21,800 Cost of Goods Sold 75,200 Gross Profit Operating Expenses 52,800 28,000 24,800 7,440 Income from Operations Income Tax Expense (30%) Net Income $ 17,360 Assume that you have been asked to restate the financial statements to incorporate LCM. You have developed the following data relating to the ending inventory: Market Value per Unit $3.40 1.40 0.70 2.40 Purchase Cost Item Quantity Per Unit Total 2,300 700 2,900 2,300 $2.40 3.00 5,520 2,100 4,060 10,120 1.40 4.40 $21,800