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Please fill in the blanks and explain how it was done Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used
Please fill in the blanks and explain how it was done
Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply the LC&NRV to the ending inventory. The preliminary income statement is as follows: $230,000 Sales Revenue Cost of Goods Sold Beginning Inventory Purchases $ 24,000 127,000 Goods Available for Sale Ending Inventory (FIFO cost) 151,000 32,860 Cost of Goods Sold 118,140 Gross Profit Operating Expenses 111,860 49,000 Income from Operations Income Tax Expense (30%) 62,860 18,858 Net Income $ 44,002 Assume that you have been asked to restate the financial statements to incorporate the LC&NRV. You have developed the following data relating to the ending inventory: Purchase Cost Item IOA Quantity 1,680 930 3,670 1,680 B C D Per Unit $2.00 6.00 4.00 5.50 Current Replacement Cost per Unit (Net Realizable Value) $4.40 2.50 1.50 4.00 Total $ 3,360 5,580 14,680 9,240 $32,860 Required: 1-a. Restate the income statement to reflect the LC&NRV rule of the ending inventory. SPRINGER ANDERSON GYMNASTICS Income Statement (LC&NRV basis) For the Year Ended December 31 Sales revenue $ 230,000 24,000 127,000 151,000 Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Income from operations 230,000 49,000 181,000 Income tax expense Net income $ 0 1-b. Apply the lower of cost and net realizable value on an item-by-item basis and show computations. Item LC&NRV Valuation A B D $ 0Step by Step Solution
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