Complete this question by entering your answers in the tabs below.Required 1Required 2Compare and explain the LCM/NRV effect on each amount in the income statement that was changed in requirement 1.(Decreases should be indicated by a minus sign.)Amount ofLCM/NRVBasisFIFO CostItem ChangedIncreaseBasis(Decrease)Ending Inventory$131,900Cost of Goods Sold$104,100Gross ProfitIncome from Operations122,900Income Tax Expense$36,870Net Income$86,030< Required 1Required 2 > Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFOinventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows:Sales RevenueCost of Goods Sold$296,000$ 38,000198,000236,000131,900Beginning InventoryPurchasesGoods Available for SaleEnding InventoryCost of Goods Sold104,100191,90069,000122,90036,870$ 86,030Gross ProfitOperating ExpensesIncome from OperationsIncome Tax Expense (30%)Net IncomeAssume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following datarelating to the ending inventory:Purchase CostItem Quantity Per Unit2,7001,7007,8003,400Net RealizableValue per Unit$ 93Total$ 21,6008,50078,00023,800$131,900$ 8101274ABCD

Name: Complete this question by entering your answers in the tabs below.Req
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Complete this question by entering your answers in the tabs below.Required 1Required 2Compare and explain the LCM/NRV effect on each amount in the income statement that was changed in requirement 1.(Decreases should be indicated by a minus sign.)Amo

LCM means lower of cost or market value

Business

Accounting

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compare and explain the LCM/NRV effect on each amount in the income statement that was changed in requirement 1. (Decreases should be indicated by a minus sign.) Amount of Increase (Decrease) FIFO Cost LCM/NRV Item Changed Basis Basis Ending Inventory 2$ 131,900 Cost of Goods Sold $ 104,100 Gross Profit Income from Operations $ 122,900 Income Tax Expense $ 36,870 Net Income 2$ 86,030 < Required 1 Required 2