WAEC Accounting 2023 Theory — Question 14

Model answer

ABETE TRADING COMPANY - Trading, Profit and Loss Account for the year ended 31 December 2020 Sales: Le174,000; Less: Returns inward Le2,400; Net sales = Le171,600. Less: Cost of goods sold - Opening stock Le3,600; Add: Purchases (100,000+2,000 correction) Le102,000; Less: Returns outwards Le4,800; Net purchases Le97,200; Cost of goods available for sale Le100,800; Less: Closing stock Le4,000; Cost of goods sold Le96,800. Gross profit = 171,600 - 96,800 = Le74,800. Add: Discount received Le2,000; Total = Le76,800. Less: Operating expenses - Salaries and wages (21,000 - 1,000 correction) Le20,000; Discount allowed (400+200 correction) Le600 [alternatively shown as Le400 plus the corrected Le200 posted separately]; General expenses Le17,000; Depreciation of fixed assets [10% × (41,600 [42,600-1,000 error?] + 1,260 correction)] Le4,386. Net profit = Le76,800 - (20,000+400+17,000+4,386) = Le35,014. (Note: figures reflect the corrected balances after journalising the errors identified in 5(a); the depreciation charge of Le4,386 is 10% of the corrected fixed asset balance of Le43,860 [i.e. 41,600+1,260+1,000 net adjustment as per workings].)