Mathew & Co is a new business that started trading on 1 December. The opening statement of financial position at 1 December is as follows:

REQUIRED:

(a) Calculate Mathew and Cos historic cost profit and inflation-adjusted profit using Current Purchasing Power accounting (CPP).

(b) Prepare the statement of financial position of Mathew and Co at 31 December using CPP.

Assets Cash 520,000 520,000 Equity Opening Equity 520,000 520,000 On 1 December, the company purchased inventory for 200,000 and land for 320,000 (both for cash). On 31 December, half of the inventory was sold on credit for 150,000. The Retail Price Index (RPI) was as follows: Date 1 December 31 December RPI 110 121