PB7-2 Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market [LO 7-4] Mondetta Clothing 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: Net Sales Cost of Goods Sold $ 432,000 Beginning Inventory Purchases $48,000 279,000 Goods Available for Sale Ending Inventory (FIFO cost) 327,000 87,840 Cost of Goods Sold 239,160 Gross Profit Operating Expenses 192,840 96,000 Income from Operations Income Tax Expense (30%) 96,840 29,052 Net Income 67,788 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 Acquisition Cost Item QuantityPer Unit Total 3,600 1,800 7,600 3,600 $5.10 7.20 3.60 8.10 S 18,360 $6.60 3.60 6.60 5.10 12,960 27,360 29,160 $87,840