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 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 (30%) Net Income $ 138,000 $ 14,500 90,000 104,500 24,980 79,600 58,400 30,500 27,900 8,370 $ 19,530 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 Total Replacement Cost per Unit Iten Quantity Per Unit A 2,050 $2.90 $ 5,945 $ 3.90 B 700 3.50 2,450 1.90 C 3,400 1.90 D 2,050 4.90 6,460 10,045 .95 2.90 $ 24,900 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.