Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its...
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Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its 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 $144,00e Sales Revenue Cost of Goods Sold Beginning Inventory $ 16,000 93,000 Purchases Goods Available for Sale 109,000 24, 580 Ending Inventory 84,420 59,580 32,00e 27,580 8,274 19,306 Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending inventory: Purchase Cost Total $ 5,120 3,000 8,140 8,320 $24,580 Replacement Cost per Unit $4.20 2.20 1.10 3.20 Item Quantity 1,600 750 3,700 1,600 Per Unit $3.20 4.00 2.20 5.20 Required: 1. Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis
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