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		$	3.90			$	7,605			$	4.90
B		800			4.25				3,400				2.90
C		4,400			2.90				12,760				1.45
D		1,950			5.90				11,505				3.90
								$	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.