Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory usir 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 $ 130,000 Cost of Goods Sold Beginning Inventory $ 12,500 Purchases 86,000 Goods Available for Sale 98,500 Ending Inventory 22,350 Cost of Goods Sold 76,150 Gross Profit 53,850 Operating Expenses 28,500 Income from Operations 25,350 Income Tax Expense (30) 7,605 Net Income $ 17,745 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: Item Purchase Cost Replacement cost per Quantity Per Unit Total Unit 2,250 $ 2.50 $ 5,625 $ 3.50 700 3.00 2,100 1.50 3,000 1.50 4,500 .75 2,250 4.50 10,125 2.50 $ 22,350 8 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