Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis.

Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1.

Sales Revenue					$	144,000
Cost of Goods Sold
Beginning Inventory	$	16,000
Purchases		93,000
Goods Available for Sale		109,000
Ending Inventory		24,580
Cost of Goods Sold						84,420
Gross Profit						59,580
Operating Expenses						32,000
Income from Operations						27,580
Income Tax Expense (30%)						8,274
Net Income					$	19,306

				Purchase Cost
Item	Quantity			Per Unit				Total				Replacement Cost per Unit
A		1,600		$	3.20			$	5,120			$	4.20
B		750			4.00				3,000				2.20
C		3,700			2.20				8,140				1.10
D		1,600			5.20				8,320				3.20
								$	24,580

Answer rating: 100% (QA)

Restated Income Statement Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Goods Ava... View the full answer