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 $ 160,000 $ 20,000 101,000 121,000 38,140 82,860 77,140 36,000 41,140 8,228 Income Tax Expense (20%) Net Income $ 32,912 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 Replacement Cost per Unit Item ABCD Quantity 2,000 Per Unit $ 4.00 Total $ 8,000 $ 5.00 800 5.80 4,640 2.90 4,500 2,000 3.00 13,500 1.45 6.00 12,000 $ 38,140 4.00 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.