I dont understand required 2 cure httpsnewconnectmheducation

I don\'t understand required 2

cure https://newconnect.mheducation.com/flow/connect.html ter 7 Homework Saved Help Save & Exit Check $142,000 Sales Revenue Cost of Goods Sold Beginning Inventory Purchases $15,580 92,000 Goods Available for Sale 107,500 23,245 Ending Inventory 84, 255 57,745 31,500 26,245 19,498 15,747 Cost of Goods Sold 2:43:50 Gross Profit Operating Expenses Income from Operations Income Tax Expense (40%) Net Income int Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have following data relating to the ending inventory developed the Purchase Cost Per Unit $3.10 4.25 2.10 5.10 Total $ 4,805 2,975 7,560 7,905 $23,245 Replacement Cost per Unit $4.10 2.10 1.05 3.10 Item Quantity 1,550 700 3,600 1,550 E0 e to search

Solution

Item Quantity Cost per unit Total purchase cost Market Value per unit LCM based total cost A 1,550 $3.10 $4,805.00 $4.10 1550×3.10 = 4805 B 700 $4.25 $2,975.00 $2.10 700×2.10 = 1470 C 3,600 $2.10 $7,560.00 $1.05 3600×1.05 = 3780 D 1,550 $5.10 $7,905.00 $3.10 1550×3.10 = 4805 Total cost following LCM = $14860 SPRINGER ANDERSON GYMNASTICS Income Statement (LCM basis) For the year ended December 31 Sales Revenue $142,000.00 Cost of goods sold: Beginning Inventory $15,500.00 Purchases $92,000.00 Goods Available for sale $107,500.00 Ending inventory $14,860.00 Cost of goods sold $92,640.00 Gross Profit $49,360.00 Operating expenses $31,500.00 Income from Operations $17,860.00 Income tax expenses (40%) $7,144.00 Net income $10,716.00 Item changed FIFO cost basis LCM basis Amount of increase/decrease Ending inventory 23,245 14,860 -8,385 Cost of goods sold 84,255 92,640 8,385 Gross Profit 57,745 49,360 -8,385 Income from Operations 26,245 17,860 -8,385 Income tax expenses 10,498 7,144 -3,354 Net income 15,747 10,716 -5,031