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In: AccountingSpringer Anderson Gymnastics prepared its annual financialstatements dated December 31. The company reported its inventory...Springer Anderson Gymnastics prepared its annual financialstatements dated December 31. The company reported its inventoryusing the LIFO inventory costing method but did not compare thecost of its ending inventory to its market value (replacementcost). The preliminary income statement follows:Sales Revenue$160,000Cost of Goods SoldBeginning Inventory$20,000Purchases101,000Goods Available for Sale121,000Ending Inventory38,140Cost of Goods Sold82,860Gross Profit77,140Operating Expenses36,000Income from Operations41,140Income Tax Expense (20%)8,228Net Income$32,912Assume that you have been asked to restate the financialstatements to incorporate the LCM/NRV rule. You have developed thefollowing data relating to the ending inventory:Purchase CostItemQuantityPer UnitTotalReplacementCost per UnitA2,000$4.00$8,000$5.00B8005.804,6402.90C4,5003.0013,5001.45D2,0006.0012,0004.00$38,140Required:Restate the income statement to reflect LCM/NRV valuation of theending inventory. Apply LCM/NRV on an item-by-item basis.Compare the LCM/NRV effect on each amount that was changed inthe preliminary income statement in requirement 1.