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QUESTION THREE (10 marks) 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 5,100 Product B 2,900 2,800 Product 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.
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