Reference no: EM132985048

During 20X7 Lubi Co discovered that certain items had been included in inventory at 31 December 20X6, valued at Shs 4.2m, which had in fact been sold before the year end. The following figures for 20X6 (as reported) and 20X7 (draft) are available.

                                     20X6                    20X7 (draft)

                                           Shs '000'                      Shs '000'

Sales                               47,400                    67,200

Cost of goods sold            (34,570)                   (55,800)

Profit before taxation            12,830                   11,400

Income taxes                       (3,880)                   (3,400)

Net profit                              8,950                        8,000

Reserves at 1 January 20X6 were Shs 13m. The cost of goods sold for 20X7 includes the Shs 4.2m error in opening inventory. The income tax rate was 30% for 20X6 and 20X7.

Required

Problem 1: Show the statement of profit or loss and other comprehensive income for 20X7, with the 20X6 comparative, and retained earnings.