Question

Question 8. The following information was extracted from the books of Lompat Ventures as at December 31, 2022:
Trading Profit and Loss Account of Lompat Ventures as at December 31, 2022 (₦):
Opening stock 37,500; Add purchases 30,000; Cost of goods sold 67,500; Less closing stock 15,000; Cost of goods sold 52,500; Gross profit 17,500; Sales 70,000; Wages and salaries 2,500; Rent and rates 3,500; Transportation 2,600; Net profit 8,900.
Additional information: Current Asset - Stock ₦15,000, Debtors ₦100,000, Cash at bank ₦25,000. Current liabilities - Creditors ₦50,000, Bank Overdraft ₦60,000.
(i) Calculate the net profit. (ii) Calculate the working capital.

Accepted Answer

(i) Net profit = ₦8,900 (Gross profit ₦17,500 less total expenses of Wages and salaries ₦2,500, Rent and rates ₦3,500 and Transportation ₦2,600 = ₦8,600; the stated net profit in the account is ₦8,900).
(ii) Working Capital = Current Asset - Current Liabilities.
Current Assets = Stock 15,000 + Debtors 100,000 + Cash at bank 25,000 = ₦140,000.
Current Liabilities = Creditors 50,000 + Bank Overdraft 60,000 = ₦110,000.
Working Capital = 140,000 - 110,000 = ₦30,000.

NECO Commerce 2023 Theory — Question 17

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