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Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LCM
Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary income statement follows Sales Revenue Cost of Goods Sold $134,000 Beginning Inventory Purchases $ 13,500 88,000 Goods Available for Sale Ending Inventory (FIFO cost) 101,500 23,800 Cost of Goods Sold 77,700 Gross Profit Operating Expenses 56,300 29,500 26,800 8,040 Income from Operations Income Tax Expense (30%) Net Income $ 18,760 Assume that you have been asked to restate the financial statements to incorporate LCM. You have developed the following data relating to the ending inventory Market Value Purchase Cost Item Quantity Per Unit Total 2,150 700 C 3,200 D 2,150 $2.70 $ 5,805 2,450 5,440 10,105 3.50 1.70 4.70 per Unit $3.70 1.70 0.85 2.70 $23,800
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