Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows:

Sales Revenue					$	154,000
Cost of Goods Sold
Beginning Inventory	$	18,500
Purchases		98,000
Goods Available for Sale		116,500
Ending Inventory		31,930
Cost of Goods Sold						84,570
Gross Profit						69,430
Operating Expenses						34,500
Income from Operations						34,930
Income Tax Expense (40%)						13,972
Net Income					$	20,958

Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending inventory:

				Purchase Cost
Item	Quantity			Per Unit				Total				Replacement Cost per Unit
A		1,850		$	3.70			$	6,845			$	4.70
B		800			4.00				3,200				2.70
C		4,200			2.70				11,340				1.35
D		1,850			5.70				10,545				3.70
								$	31,930

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 the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1.

Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1. (Decreases should be indicated by a minus sign.) Cost of Goods Sold Item Changed Beginning Inventory Purchases Goods Available for Sale LIFO Cost Basis LCM/NRV Basis Amount of Increase (Decrease) Ending Inventory Cost of Goods Sold Ending Inventory Cost of Goods Sold Gross Profit Gross Profit Income from Operations Income Tax Expense Net Income Operating Expenses Income from Operations come Tax Expense Net Income