Swed apter 7 Homework 2 PA7-2 Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market/Net Realizable Value [LO 7-4) 5 gints 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: eBook $126,000 Sales Revenue Cost of Goods Sold Beginning Inventory $11,500 54,000 Print Purchases 95,500 21,400 Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Incone Tax Expense (4x) 74,100 51,900 27. See 24,400 9,760 $ 14,640 Net Income 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 A Quantity 2,350 750 2,880 2,350 Per Unit $2.30 3.00 1.30 Total $ 5,405 2,250 3,640 10.105 $21,400 Replacement Cost per Unit 53.30 1.40 0.7 2.30 D Required: 1. Restate the income statement to reflect LCM/NRV valuation of the ending inventory Apply LCMNRV on an item by-item basis 2. Compare the LCMNRV effect on each amount that was changed in the preliminary income statement in requirement1 Comlete this nuostinn l enterina nur answers in the tashew MC Graw Will Q BE E Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1. (Decreases should be indicated by a minus sign.) Item Changed LIFO Cost Basis LCM/NRY Basis Amount of Increase (Decrease) Ending Inventory Cost of Goods Sold Gross Profit Income from Operations Income Tax Expense Net Income