and P7.4, i.e. start-x1 inventory comprises 30 machines at 2,500 each, 20 are sold at end-x1 – each for 4,000 cash – when the replacement cost is 3,000, and general prices increase 10% in x1.

Required Draw up Exprés Company’s x1 accounts, assuming it uses the end-x1 purchasing power of the currency and it values the coffee-making machines at:

(a) historical cost;

(b) replacement cost.

Check figure:

Profit for year:

(a) 23,750;

(b) 26,250 AppenedixLO1