I.M. Confused, computer dealer.
From the following information compute
(a) Profit and loss accounts and closing balance sheets for each of the years 20X1 and 20X2 under historical cost principles.
(b) Profit and loss accounts and closing balance sheets for each of the years 20X1 and 20X2 under current replacement cost principles.
Comment briefly on the significance of the results.

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Date Event relating to trading in computers Wealth cash Computers 01/01 X1 02/01 X1 01/05/X1 01/09 X1 01/10/X1 31/12 X1 03/03 X2 Set up business with10 000 in the bank Buy six computers for 1 000 each Sell two for 1 500 each (RC 1 100) Buy two computers for 1 200 eaclh Pay annual rent of 600 Financial year-end. Pay tax ofも200 Sell two computers for 1 800 each (RC 1 300) Pay annual rent 700 Buy two computers for 1 400 each Financial year-end. Pay tax 450 10000 4 000 7 000 4 600 4 000 3 800 7 400 01/10 /X2 6 700 3 900 3 450 31/12 X2