Smart Company prepared its annual financlal statements dated December $31.$ The company reported Its Inventory using the FIFO Inventory costing method and falled to evaluate its net realizable value at December $31.$ The preliminary income statement follows:

$\backslash$table$[[$Sales Revenue,,$ $296,000],[$Cost of Goods Sold,,$],[$Beginning Inventory,$$38,000,],[$Purchases$,198,000,],[$Goods Available for Sale,$236,000,],[$Ending Inventory,$131,960,],[$Cost of Goods Sold,,$104,100],[$Gross Profit,,$191,900],[$Operating Expenses,,$69,000],[$Income from Operations,,$122,900],[$Income Tax Expense $(3$ex$),,36,870],[$Net Income,,$$86,030$