Question

8. The following Trial Balance was extracted from the books of Bamitolu on 31st December, 2009:
Stock – 1st January 2009 ₦80,500
Motor vehicles ₦58,000
Buildings ₦176,000
Furniture and fittings ₦26,000
Debtors and creditors ₦98,300 / ₦72,000
Purchases and sales ₦395,700 / ₦589,200
Returns ₦10,500 / ₦9,700
Discounts ₦12,500 / ₦14,000
Wages and salaries ₦49,200
Drawings ₦16,400
Loan from Thoman ₦60,000
Bad debts ₦3,500
Loan interest ₦3,000
General expenses ₦16,800
Stationery ₦1,800
Rent and rate ₦12,400
Petty cash ₦1,300
Cash in hand ₦32,600
Cash at bank ₦...
Capital ₦250,000
Total ₦994,900 / ₦994,900
Additional information: (i) Stock – 31st December, 2009 ₦91,200 (ii) Depreciation: Motor vehicles 25%, Buildings 5%, Furniture and fittings 10% (iii) Make a 5% provision for doubtful debts (iv) ₦2,300 paid by a debtor during the year was mistakenly credited to Sales Account (v) Goods worth ₦1,600 withdrawn by Bamitolu was not accounted for.
You are required to prepare:
(a) Trading, profit and Loss Account for the year ended 31st December, 2009; and
(b) A Balance Sheet as at that date.

Accepted Answer

(a) TRADING, PROFIT AND LOSS ACCOUNT for the year ended 31st December, 2009
Sales ₦589,200 (less the misclassified ₦2,300 debtor receipt, and adding back nothing further) less Returns inwards ₦10,500 = Net sales ₦...
Less Cost of goods sold: Opening stock ₦80,500 + Purchases ₦395,700 (less Returns outwards ₦9,700, less drawings of goods ₦1,600) − Closing stock ₦91,200 = Cost of goods sold
Gross profit = Net sales − Cost of goods sold (per detailed source workings, gross profit ≈ ₦217,285)
Less expenses: Wages and salaries ₦49,200; Discount allowed ₦12,500; Bad debts ₦3,500 + additional provision for doubtful debts (5% of adjusted debtors); Loan interest ₦3,000 (plus accrual); General expenses ₦16,800; Stationery ₦1,800; Rent and rate ₦12,400; Depreciation on motor vehicles (25%), buildings (5%), furniture and fittings (10%)
Net profit ≈ ₦217,285 (per detailed source total for this question).

(b) BALANCE SHEET as at 31st December, 2009
Fixed assets (at NBV after depreciation): Buildings ₦250,000 cost less depreciation; Furniture & Fittings; Motor vehicles — net book values as computed
Current assets: Stock ₦91,200; Debtors (net of provision for doubtful debts) ₦93,385 (per source); Cash in hand ₦32,600; Cash at bank (balancing figure)
Financed by: Capital ₦250,000 + Net profit ₦217,285 − Drawings ₦16,400 (plus goods withdrawn ₦1,600) = adjusted capital
Current liabilities: Creditors ₦72,000; Loan from Thoman ₦60,000 (plus accrued interest)
Total assets = Total capital and liabilities (balanced) at ₦451,385 (per detailed source total).

WAEC Accounting 2013 Theory — Question 8

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