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 $ $158,000$

Cost of Goods Sold

Beginning Inventory $ $19,500$

Purchases $100,000$

Goods Available for Sale $119,500$

Ending Inventory $35,270$

Cost of Goods Sold $84,230$

Gross Profit $73,770$

Operating Expenses $35,500$

Income from Operations $38,270$

Income Tax Expense $(30\%)11,481$

Net Income $ $26,789$

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 Quantity Per Unit Total Replacement Cost per Unit

A $1,950$ $ $3\mathrm{.}90$ $ $7,605$ $ $4\mathrm{.}90$

B $8004\mathrm{.}253,4002\mathrm{.}90$

C $4,4002\mathrm{.}9012,7601\mathrm{.}45$

D $1,9505\mathrm{.}9011,5053\mathrm{.}90$

$ $35,270$

Required:

Restate the income statement to reflect LCM$/$NRV valuation of the ending inventory. Apply LCM$/$NRV on an item$-$by$-$item basis.

Compare the LCM$/$NRV effect on each amount that was changed in the preliminary income statement in requirement $1.$