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P6-6 (Algo) Reporting the Statement of Earnings and Cash Flow Effects of Lower of Cost and Net Realizable Value LO6-5 Smart Company prepared its annual financial statements dated December 31 of the current year. The company applies the FIFO inventory costing method; however, the company neglected to apply the LC\&NRV valuation to the ending inventory. The preliminary statement of earnings for the current year follows: Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31 of the current year, at the LC\&NRV Apply the LC\&NRV rule on an item-by-item basis. Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31 of the current year, at the Apply the LC\&NRV rule on an item-by-item basis. Required: 1. Restate the statement of earnings to refiect the valuation of the ending inventory on December 31 of the current year, at the LCBNRV. Apply the LC\&NRV rule on an item-by-item basis. Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31 of the current year, at the LC. \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Statement of Earnings (LC8NRV Basis) } \\ \hline For the Year Ended December 31, Current Year \\ \hline Cost of sales: & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.) 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.) 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.) 3. This part of the question is not part of your Connect assignment. 4-a. What effect (increase, decrease, no effect) did the LC\&NRV rule have on the cash flow for the current year? Decreased No effect Increased 4-b. What will be the long-term effect on cash flow (increase, decrease, no effect)? Increased Decreased No effect P6-6 (Algo) Reporting the Statement of Earnings and Cash Flow Effects of Lower of Cost and Net Realizable Value LO6-5 Smart Company prepared its annual financial statements dated December 31 of the current year. The company applies the FIFO inventory costing method; however, the company neglected to apply the LC\&NRV valuation to the ending inventory. The preliminary statement of earnings for the current year follows: Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31 of the current year, at the LC\&NRV Apply the LC\&NRV rule on an item-by-item basis. Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31 of the current year, at the Apply the LC\&NRV rule on an item-by-item basis. Required: 1. Restate the statement of earnings to refiect the valuation of the ending inventory on December 31 of the current year, at the LCBNRV. Apply the LC\&NRV rule on an item-by-item basis. Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31 of the current year, at the LC. \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Statement of Earnings (LC8NRV Basis) } \\ \hline For the Year Ended December 31, Current Year \\ \hline Cost of sales: & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.) 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.) 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.) 3. This part of the question is not part of your Connect assignment. 4-a. What effect (increase, decrease, no effect) did the LC\&NRV rule have on the cash flow for the current year? Decreased No effect Increased 4-b. What will be the long-term effect on cash flow (increase, decrease, no effect)? Increased Decreased No effect

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