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Compare the unadjusted and adjusted prices

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Question - Consider the following items of Andaman Enterprise for the year ended 31 December 2019:

Opening net monetary assets $ (15000)

Sales 210,000

Purchase of goods (105,000)

Payment of interest (2,500)

Payment of administrative expenses (10,000)

Tax expense (25,000)

Dividends (12,000)

In the same year, the general price level index for all these items was 135/130.

Under the assumptions of CPPA, required to:

a. Compare the unadjusted and adjusted prices.

b. Calculate the value of unadjusted and adjusted net closing monetary assets.

c. Calculate the net profit or loss at the end of the year and compare the purchasing power to explain how much more or less the firm would have needed to have the same purchasing power they had at the commencement of the year.

Reference no: EM132547167

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