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		$ 142,000
Cost of Goods Sold
Beginning Inventory	$ 15,500
Purchases	92,000
Goods Available for Sale	107,500
Ending Inventory	23,245
Cost of Goods Sold		84,255
Gross Profit		57,745
Operating Expenses		31,500
Income from Operations		26,245
Income Tax Expense (40%)		10,498
Net Income		$ 15,747

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	1,550	$ 3.10	$ 4,805	$ 4.10
B	700	4.25	2,975	2.10
C	3,600	2.10	7,560	1.05
D	1,550	5.10	7,905	3.10
			$ 23,245

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.