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P$6-6($Algo$)$ Reporting the Statement of Earnings and Cash Flow Effects of Lower of Cost and Net Realizable Value L$06-5$

Smart Company prepared its annual financial statements dated December $31$ of the current yan. inventory costing method, however, the company neglected to apply the LC&NDV$,$ statement of etrings for the curient year foltows.

Assume that you have been asked to reside the financial statements is incomparale the LCANRV imventory valuation fule. You have developed the following data relating to the ending imentiory at December $31$ of the current year:

$\backslash$table$[[$Iten$,$quantity,$\backslash$table$[[$Acquisition$],[$Cast$]],$Net,$\backslash$table$[[$Realizabin$],[$Value$]]],[$Unit$,$Total$],[$A$,3,250,14\mathrm{.}69,512,602,,85\mathrm{.}00],[$a$,1,600,$E$.$Bg$,9,609,,4\mathrm{.}50],[$c$,7,200,2.50,18,900,,4\mathrm{.}50],[(1),3,390,7.$ EO$,23,168,,5\mathrm{.}00],[,,,563,309,,]]$

Required: Apply the LCENRV rule an an item$-$by$-$item besis.

$\backslash$table$[[5$MART COMPANY$],[$Starement of Eamings $($LCEANV Basls$)],[$For the Year Ended December $31,$ Curnent Year$],[$sales renenue,,$3,290,000],[$Cast of sales:$],[$Bepinning imentary,$5,32,000,,],[$Purchases$,194,000,,],[$L$],[,228,000,,],[$Ending merkary,$54,390,,],[$cas of sines$],[$Grass prats,,,$29$i$,$jno$],[$Operaing expense$],[$Pretax eamng,,,$290,000],[$Incame tax expense,,,$],[$Net eamngs,,$5,2901,000]]$

minus sign,

$\backslash$table$[[$Itema Chaogred,Ethect,$\backslash$table$[[$Amount of$],[$Charyge$]]],[$Ending inventory,Decreased,$],[$Cast of sales,movased,$],[$Gross profte,Decreased,$],[$Pretax earrings,Decreased,$],[,$Decreased,$],[$Nal eaming,Decieased,$]]$

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