Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply the LC&NRV to the ending inventory. The preliminary income statement is as follows: $140,000 Sales Revenue Cost of Goods Sold Beginning Inventory Purchases $ 15,000 91,000 Goods Available for Sale Ending Inventory (FIFO cost) 106,000 22,000 Cost of Goods Sold 84,000 Gross Profit Operating Expenses 56,000 31,000 Income from Operations Income Tax Expense (30%) 25,000 7,500 Net Income $ 17,500 Assume that you have been asked to restate the financial statements to incorporate the LC&NRV. You have developed the following data relating to the ending inventory: Purchase Cost Item A B D Quantity 1,500 750 3,500 1,500 Per Unit $3 4 2 5 Total $ 4,500 3,000 7,000 7,500 Current Replacement Cost per Unit (Net Realizable Value) $ 4 2 1 3 $22,000 Required: 1-a. Restate the income statement to reflect the LC&NRV rule of the ending inventory. SPRINGER ANDERSON GYMNASTICS Income Statement (LC&NRV basis) For the Year Ended December 31 Sales revenue $ 140,000 Cost of goods sold: Beginning inventory 15,000 Purchases 91,000 Goods available for sale 106,000 Ending inventory 14,000 Cost of goods sold 92,000 Gross profit 48,000 Operating expenses 31,000 Income from operations 17,000 Income tax expense 5,100 Net income $ 11,900 1-b. Apply the lower of cost and net realizable value on an item-by-item basis and show computations. LC&NRV Item Valuation B D $ 0