Question

7(a) The authorized and issued share capital of Ozideli Limited comprised 400,000 ordinary shares of Le 1 each and 100,000 8% preference shares of Le 1 each.
Trial Balance as at 31st December 2018 (Dr/Cr in Le): Sales 1,500,000 (Cr); Purchases 1,000,000 (Dr); General expenses 280,000 (Dr); Debenture interest 8,400 (Dr); 7% Debentures 120,000 (Cr); Ordinary share capital 400,000 (Cr); 8% Preference share capital 100,000 (Cr); Plant and machinery at cost 160,000 (Dr); Motor vehicle at cost 70,000 (Dr); Profit and loss account (31/12/17) 8,600 (Cr); Creditors 172,400 (Cr); Debtors 500,000 (Dr); General reserve 10,000 (Cr); Provision for depreciation: Plant and machinery 20,000 (Cr), Motor vehicle 10,000 (Cr); Bank 22,600 (Dr); Stock (31/12/17) 300,000 (Dr). Totals: 2,341,000 = 2,341,000.

Additional information:
i. Stock on hand at 31/12/2018 was Le 400,000
ii. The directors were to receive remuneration of Le 70,000
iii. Depreciation is to be calculated on plant and machinery at Le 32,000 and motor vehicle at Le 14,000
iv. The directors decided to transfer Le 12,000 to general reserve
v. Preference dividend for 2018 will be paid on 10/01/2019.

You are required to prepare:
(a) Trading, Profit and Loss and Appropriation Account for the year ended 31s December 2018;
(b) Balance Sheet as at that date.

Accepted Answer

(a) TRADING, PROFIT AND LOSS AND APPROPRIATION ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER 2018 (Le)
Opening stock 300,000; Purchases 1,000,000; Cost of goods available for sale 1,300,000; Less closing stock (400,000); Cost of goods sold 900,000; Gross profit 600,000; Sales 1,500,000 (Gross profit b/d 600,000)
General expenses 280,000; Debenture interest 8,400; Depreciation: Plant & machinery 32,000, Motor vehicle 14,000; Net profit 265,600; (Total 600,000 = 600,000)
Directors' remuneration 70,000; General reserve 12,000; Proposed preference dividend (8% of 100,000) 8,000; Retained profit 184,200; Total 274,200 = Net profit 265,600 + Profit b/d 8,600 = 274,200

(b) BALANCE SHEET AS AT 31ST DECEMBER 2018 (Le)
Authorised/Issued capital: 400,000 Ordinary shares @ Le1 = 400,000; 100,000 8% Preference shares @ Le1 = 100,000; Total issued capital 500,000
Reserves: General reserve (10,000+12,000) 22,600; Retained profit 184,200
Long-term liability: 7% Debentures 120,000
Current liabilities: Creditors 172,400; Directors' remuneration 70,000; Proposed dividend 8,000
Fixed assets (at cost less accumulated depreciation): Plant and machinery 160,000 − 52,000 = 108,000; Motor vehicle 70,000 − 24,000 = 46,000
Current assets: Stock 400,000; Debtors 500,000; Bank 22,600
Balance sheet totals both sides = Le1,076,200

WAEC Accounting 2022 Theory — Question 15

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