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(Solved): Financial Reporting Analysis (  The statement of income for the year ending December 31, 2021 ...



Financial Reporting Analysis ( 

  1. The statement of income for the year ending December 31, 2021 for Water Works Limited was as follows:

$

Revenue

3,450,000

Cost of Sales

1,795,000

Gross Profit

1,655,000

Other operating expenses

500,000

PBIT

1,155,000

 

 

The company uses the LIFO method of stock valuation, but the company is assessing a change to the weighted average method. Details of inventory for December 2021 is as follows:

Inventory valuation under:

LIFO               Weighted Average

$000                $000

January 1, 2021              180,000            175,200

December 31, 2021         294,000            264,500

 

Calculate the PBIT if the weighted average method of stock valuation is used.

 



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