Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The con the LIFO inventory costing method but did not compare the cost of its ending inventory to its market preliminary income statement follows: Sales Revenue $124,000 Cost of Goods Sold Beginning Inventory $11,000 83,000 Purchases 94,000 20,700 Goods Available for Sale Ending Inventory Cost of Goods Sold 73,300 Gross Profit 50,700 27,000 Operating Expenses Income from Operations Income Tax Expense (35%) 23,700 8,295 $ 15,405 Net Income following data relating to the ending inventory: Purchase Cost Replacement Cost per Unit Quantity 2,400 Per Unit Total Item $ 5,280 2,100 $2.20 $3.20 A 700 3.00 B 1.20 2,700 0.60 C 1.20 3,240 10,080 4.20 2.20 D 2,400 $20,700 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 SPRINGER ANDERSON GYMNASTICS Income Statement (LCM/NRV basis) For the Year Ended December 31 Sales Revenue $124,000 Cost of Goods Sold: 11,000 3,000 Beginning Inventory Purchases Goods Available for Sale 94,000 Ending Inventory (15,660) Cost of Goods Sold Gross Profit Operating Expenses Income from Operations (27,000) Income Tax Expense Net Income Compare the LCM/NRV effect on each amount that was changed in 1. (Decreases should be indicated by a minus sign.) Amount of Increase (Decrease) LIFO Cost LCM/NRV Basis Item Changed Basis 20,700 20,700 Ending Inventory Cost of Goods Sold Gross Profit 73,300 Income from Operations Income Tax Expense Net Income