Question

10. Wale started business on 1 January 2022 with D100,000 as capital and kept few records. His assets and liabilities as at 31 December 2022 were given. Wale withdrew D17,300 cash for personal use and deposited an additional D8,000 into the business. Required: (a) Calculate the Closing Capital; (b) Prepare Statement of Net Profit for the year ended 31 December 2022; (c) Prepare the Balance Sheet as at that date.

Accepted Answer

(a) Closing capital = Total assets (Premises 280,000 + Stock 62,000 + Debtors 4,800 + Bank 12,400 = 359,200) less Total liabilities (Loan 150,000 + Creditors 13,200 = 163,200) = D196,000.

(b) Statement of Net Profit: Closing capital 196,000 + Drawings 17,300 = 213,300; less Opening capital 100,000 and Additional capital 8,000 (108,000) = Net profit for the year D105,300.

(c) Balance Sheet as at 31 Dec 2022: Fixed assets — Premises D280,000; Current assets — Stock 62,000, Debtors 4,800, Bank 12,400 (total 79,200); Financed by Opening capital 100,000 + Additional capital 8,000 + Net profit 105,300 - Drawings 17,300 = Closing capital 196,000; Liabilities — Loan 150,000, Creditors 13,200; totalling D359,200.

WAEC Accounting 2024 Theory — Question 10

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