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: $ 140,000 $ 15,000 91,000 106,000 22,000 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 Ta Expense (30%) Net Income 84,000 56,000 31,000 25,000 7,500 $ 17,500 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: Cost per Item A B D Quantity 1,500 750 3,500 1,500 Purchase Cost Replacement Per Unit Total Unit $ 3 $ 4,500 $ 4 4 3,000 2 2 7,000 1 5 7,500 3 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: Cost per Item B D Quantity 1,500 750 3,500 1,500 Purchase Cost Replacement Per Unit Total Unit $ 3 $ 4,500 $ 4 4 3,000 2 2 7,000 1 5 7,500 3 $ 22,000 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