Question $3$

of

A$.$ CLA Limited is a firm that operates, in the purchases and sales of batik shirts. The financial position of the firm, as revealed by the statement of financial position as at $31$ December $2020$ using historical cost measurements, was as follows:

$\backslash$table$[[$Equity and Assets $-31$ December $2020,$GH$],[$Share capital,$3600],[$Non$-$current assets,$2,400],[$Inventory$,1,200]]$

The non$-$current asset shown on the statement of financial position was acquired on $31$ December $2020$ and has an estimated life of $5$ years, with no scrap value. Data recorded in respect of the year ended $31$ December $2021$ was as follows:

$\backslash$table$[[$Sales $($cash$),$GHe$],[$Purchases at historical cost $($cash$),4,400],[$Closing inventory at historical cost,$1,400],[$Closing inventory at replacement cost,$440],[$Cost of sales at replacement cost,$540],[,2,400]]$

It was also estimated that the replacement cost of non$-$current assets had risen to GH$2,800$ by $31$ December $2021.$

Required

Prepare the income statements for the year ended $31$ December $2021,$ using both historical cost accounting model and the current cost accounting model.

$(10$ marks$)$