Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply the LC&NRV to the ending inventory. The preliminary income statement is as follows: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Goods Available for Sale Ending Inventory (FIFO cost) Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income $ 23,000 123,000 146,000 $220,000 27,950 118,050 101,950 47,000 54,950 16,485 $ 38,465 Assume that you have been asked to restate the financial statements to incorporate the LC&NRV. You have developed the following data relating to the ending inventory: Purchase Cost Current Replacement Cost per Unit (Net Realizable Value) $4.30 Item Quantity Per Unit Total A 1,660 $2.00 $ 3,320 B 910 5.00 4,550 2.00 3,650 3.00 10,950 1.00 D 1,660 5.50 9,130 3.00 $27,950 Required: 1-a. Restate the income statement to reflect the LC&NRV rule of the ending inventory. Sales revenue SPRINGER ANDERSON GYMNASTICS Income Statement (LC&NRV basis) For the Year Ended December 31 Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Income from operations Income tax expense Net income 1-b. Apply the lower of cost and net realizable value on an item-by-item basis and show computations. LC&NRV Item Valuation A B C D