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: Required: 1-a. Restate the income statement to reflect the LC&NRV rule of the ending inventory. 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 $ 22,500 121,000 143,500 25,525 $215,000 117,975 97,025 46,000 51,025 15,308 $ 35,718 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 0 0 $ 0 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: 1-b. Apply the lower of cost and net realizable value on an item-by-item basis and show computations. Purchase Cost Item Quantity Per Unit Total A 1,650 $2.00 $ 3,300 Current Replacement Cost per Unit (Net Realizable Value) $4.25 B 900 4.50 4,050 2.50 C 3,640 2.50 9,100 2.00 D 1,650 5.50 9,075 4.50 $25,525 LC&NRV Item Valuation A B D $ 0