Question

5. The following transactions were extracted from the books of Odies Enterprises for the year ended 31st December 2018: (i) cash received from trade debtors GH¢100,000; (ii) cash paid to suppliers GH¢72,000; (iii) expenses paid during the year were: rent GH¢2,500, general expenses GH¢1,800; (iv) cash of GH¢5,200 was withdrawn by the proprietor for personal use; (v) fixed assets valued at GH¢8,000 on 31st December 2017 were to be depreciated at 10% per annum. Additional information (31 Dec 2017 / 31 Dec 2018): Trade debtors GH¢11,000 / GH¢13,200; Trade creditors GH¢4,000 / GH¢6,500; Rent owing - / GH¢500; Cash GH¢15,900 / GH¢12,100; Stock GH¢15,900 / GH¢17,000. You are required to prepare: (a) Statement of Affairs as at 1st January 2018; (b) Cash Book; (c) Trading, Profit and Loss Account for the year ended 31st December 2018.

Accepted Answer

(a) See the Statement of Affairs table in the Diagram column (Fixed assets GH¢8,000 + working capital GH¢38,800 = Capital GH¢46,800, derived from opening current assets of GH¢42,800 less current liabilities of GH¢4,000).
(b) See the Cash Book table in the Diagram column (Balance b/d GH¢15,900 + Cash from debtors GH¢100,000 = Total receipts GH¢115,900; less Purchases GH¢72,000, Rent GH¢2,500, General expenses GH¢1,800, Drawings GH¢5,200 = Balance c/d GH¢30,600 with total payments of GH¢112,100 balanced against workings for credit sales/purchases via the control accounts).
(c) See the Trading, Profit and Loss Account table in the Diagram column. Workings: Purchases ledger control account and Sales ledger control account are used to determine credit purchases (GH¢74,500) and credit sales (GH¢102,200) respectively, from which cost of goods sold (GH¢73,400), gross profit (GH¢28,800) and net profit (GH¢23,200) for the year are computed.

WAEC Accounting 2020 Theory — Question 5

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