Villandry’s inventory includes three items for which the following details are available. Supplier’s Net realisable list price value Shs. Shs. Product A 3,600 5,100Product B 2,900 2,800Product C 4,200 4,100
The company receives a 2½% trade discount from its suppliers and it also takes advantage of a 2% discount for prompt payment.
Required:(a) Calculate the total value of products A, B and C which should be shown in inventory in the statement of financial position.(b) Explain the difference that changing from a weighted average to FIFO method of inventory valuation is likely to have on an entity’s profit or loss.