Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows Sales Revenue Cost of Goods Sold 298, 39,000 Beginning InvenLury Purchases Goods Available for Sale 239,000 75,800 Ending Inventory Cost of Goods Sold 163,288e 134,800 Gross Profit Operating txpenses Income from Operations Income ax rxpense (HE%) Net Tncome 64,800 19,441 5 45,360 Assume you have been asked to restate the financlal statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory Purchase Cost Net Realizable Item Quantity Per Unit Total value per Unit 2,900 1,800 7,900 3,800 $25,200 10,800 15,800 24,000 $10 $75,800 TIP: Inventory write-downs do not affect the cost of goods available for sale. Instead, the effect of the write-down is to reduce ending inventory, which increases Cost of Goods Sold and then affects other amounts in the income statement. 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 and explain the LCM/NRV effect on each amount in the income statement that was changed in requirement 1. Complete this question by entering your answers in the tabs below Requlred 1Requlred 2 Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis SMART COMPANY Income Statement (LCM/NRV basls) For the Year Ended December 31 Sales Revenue Cost of Goods Sold: Beginning Inventory Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Incorme fron Operations Income Tax Expens Net Income