Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory usingthe LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). Thepreliminary income statement follows:Sales Revenue$ 142,000Cost of Goods SoldBeginning Inventory$ 15,500Purchases92,000Goods Available for Sale107,500Ending Inventory23,245Cost of Goods Sold84,255Gross Profit57,745Operating Expenses31,500Income from OperationsIncome Tax Expense (40%)26,24510,498Net Income$ 15,747Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed thefollowing data relating to the ending inventory:Purchase CostReplacementCost perQuantity1,550ItemPer UnitTotalUnitA$ 3.10$ 4,805$ 4.102,9757,560B7004.252.103,6002.101.05D1,5505.107,9053.10$ 23,245Required:1. Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis.2. Compare the LCM/NRV effect on each amount that was changed in the preliminary income statement in requirement 1.Complete this question by entering your answers in the tabs below.Required 1Required 2Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an item-by-item basis.SPRINGER ANDERSON GYMNASTICSIncome Statement (LCM/NRV basis)For the Year Ended December 31Sales Revenue$142,000Cost of Goods Sold:Beginning Inventory$15,500Purchases92,000Goods Available for Sale107,500Ending Inventory23,245Cost of Goods Sold84,255Gross ProfitOperating ExpensesIncome from OperationsIncome Tax ExpenseNet Income

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Description: Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory usingthe LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement

1. Item Quantity Cost per unit Replacement Cost per unit LCM/NRV per unit Ending Inventory on LCM…

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Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory i 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: $ 142,000 Sales Revenue Cost of Goods Sold $ 15,500 92,000 107,500 Beginning Inventory Purchases Goods Available for Sale Ending Inventory 23,245 84,255 57,745 31,500 Cost of Goods Sold Gross Profit Operating Expenses Income from Operations 26,245 Income Tax Expense (40%) 10,498 $ 15,747 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 Replacement Cost per Unit Quantity Per Unit 1,550 Item Total $ 3.10 $ 4.10 $ 4,805 2,975 7,560 A B. 700 4.25 2.10 3,600 2.10 1.05 1,550 5.10 7,905 3.10 $ 23,245

Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory i 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: $ 142,000 Sales Revenue Cost of Goods Sold $ 15,500 92,000 107,500 Beginning Inventory Purchases Goods Available for Sale Ending Inventory 23,245 84,255 57,745 31,500 Cost of Goods Sold Gross Profit Operating Expenses Income from Operations 26,245 Income Tax Expense (40%) 10,498 $ 15,747 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 Replacement Cost per Unit Quantity Per Unit 1,550 Item Total $ 3.10 $ 4.10 $ 4,805 2,975 7,560 A B. 700 4.25 2.10 3,600 2.10 1.05 1,550 5.10 7,905 3.10 $ 23,245

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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