60.1K

Verified Solution

Link Copied!

Springer Anderson, gymnastics prepared is annual financial statement dated December $31.$ The company reported is 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 $$152,000$ cost of goods sold, beginning inventory $$18,000.$ Purchases $$97,000.$ Goods available for sale $$115,000.$ Ending inventory $$30,420.$ Cost of good sold $$84,580$ gross profit $$67,420$ operating expenses $$34,000$ income from operations $$33,420$ income tax expenses $(30\%)$ $$10,026.$ Net income $$23,394$ assume that you have been asked to restate the financial statement to incorporate the LCM$/$NRV oral. You have developed the following data relating to the ending inventory: purchase cost item a $1800$ quantity $$3\mathrm{.}60$ per unit $$6480.$ Total replacement cost per unit for dollars and $$\mathrm{.}60.$ Item $800$ quantity, four dollars per unit, $$3200$ total, $$2\mathrm{.}60$ replacement cost per unit items, $4100$ quantity, $$2\mathrm{.}60$ per unit, $$10,660$ total, $$1\mathrm{.}30$ replacement per unit. Item D $1800$ quantity, $$5\mathrm{.}60$ per unit, $$10,080$ total, $$3\mathrm{.}60$ replacement cost per unit totals $$30,420.$ required: $1.$ Restate the income statement to reflect LCM$/$NRV valuation of the ending inventory. Apply LCM$/$NRV an item buy item basis. $2.$ Compare the LCM$/$NRV effect on each amount that was changed in the preliminary income statement in requirement $1.$

Answer & Explanation Solved by verified expert

See Answer