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 $120,000 Cost of Goods Sold Beginning Inventory $10,000 Purchases 81,000 Goods Available for Sale 91,000 Ending Inventory 18,800 Cost of Goods Sold 72,200 Gross Profit 47, Bed Operating Expenses. 26,000 Income from Operations 21,800 Income Tax Expense (30%) Net Income 6,540 $ 15,260 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 ARCO 2,500 $2.00 650 2,500 2.00 $ 5,000 1,300 1.00 2,500 2,500 4.00 10,000 $18,800 Replacement Cost per Unit $3.00 1.00 0.50 2.00 Required 1 Required 2 Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue 120,000 Cost of Goods Sold: Beginning Inventory $10,000 Purchases 81,000 Goods Available for 91,000 Sale Ending Inventory 18,800x Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income 26,000 1. (Decreases should be indicated by a minus sign.) Item Changed Ending Inventory LIFO Cost LCM/NRV Basis Basis changed in the premmary income sta Amount of Increase (Decrease) Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income < Required 1 Required 2 >