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: $154,000 $ 18,500 98,eee 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 (40%) Net Income 116,500 31,930 84 570 69,430 34 500 34,930 13,972 $ 20,958 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 54.70 Item B Per Unit $3.70 Quantity 1,850 800 4.28 1,85e 2.70 5.78 Total $5.845 3,200 11,340 10,545 $31,9 1.35 3.70 D Required: 1. Restate the income statement to reflect LCM NRV valuation of the ending Inventory, Adoly LCMNRV 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 Required 1 Required 2 Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis. SPRINGER ANDERSON GYMNASTICS Income Statement (LCMNRV basis) For the Year Ended December 31 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 Net Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1. (Decreases should be indicated by a minus sign.) Item Changed LIFO Cost Basis LCM/NRV Basis Amount of Increase (Decrease) Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income 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: $154,eee $ 18,500 98,000 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 Tax Expense (405) Net Income 116,500 31,930 84,570 69,430 34,500 34,938 13,972 $ 20,958 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 Item A Total 56,45 Quantity 1. 800 4,200 1,850 Per Unit $3.70 4.00 2.70 5.70 Replacement Cost per Unit $4.70 2.70 1.15 3.70 11.340 10,545 531,00 Required: 1. Restate the income statement to reflect LCMNRV valuation of the ending Inventory. Apply LCM NRV on an item-by-item basis 2. Compare the LCMNRV effect on each amount that was changed in the preliminary income statement in requirement
