Required information [The following information applies to the questions displayed below.) Jaffa Company prepared its annual financial statements dated December 31 of the current year. The company applies the FIFO inventory costing method; however, the company neglected to apply lower of cost or net realizable value to the ending inventory. The preliminary current year income statement follows: $300,000 $ 35,000 204,000 239,000 73,750 Sales revenue Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory (FIFO cost) Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense (408) Net income 165,250 134,750 64,000 70,750 28,300 $ 42,450 Assume that you have been asked to restate the current year financial statements to incorporate lower of cost or NRV. You have developed the following data relating to the current year ending inventory: Acquisition Cost Item Unit Total A B Quantity 3,250 1,700 7,300 3,400 $5.00 4.50 4.50 5.00 $ 16,250 7,650 32,850 17,000 $ 73,750 Net Realizable Value Per Unit $ 4.00 6.00 2.50 7.00 D 2. Compare the lower of cost or net realizable value effect on each amount that was changed on the income statement in requirement (1). (Decreases should be indicated by a minus sign.)(Round your answers to nearest dollar amount.) Item Changed FIFO Cost Basis Lower of Cost or NRV Amount of Change (Decrease) Ending inventory Cost of goods sold Gross profit Pretax income Income tax expense Net income