Question

8. The trial balance of Ahoofe Trading Enterprises as at 31st December 2020 is given. Additional information: (i) Depreciation on all fixed assets is 15% per annum on cost; (ii) Electricity prepaid GH¢640 and rent in arrears GH¢12,000; (iii) Closing stock GH¢24,200. Required: (a) Trading, Profit and Loss Account for the year ended 31st December 2020; (b) Balance Sheet as at 31st December 2020.

Accepted Answer

(a) Trading, Profit and Loss Account (year ended 31 Dec 2020):
Sales GH¢184,900 less returns inward GH¢4,500 = Net Sales GH¢180,400.
Cost of goods sold: Opening stock 16,300 + Purchases 60,300 + Carriage inward 4,000 - Returns outward 3,000 = Cost of goods available 77,600; less Closing stock 24,200 = Cost of sales 53,400.
Gross profit = 180,400 - 53,400 = GH¢127,000.
Less expenses: Depreciation (fixtures 18,060, motor vehicle 6,600), Electricity 2,460, Discount allowed 2,900, Distribution expenses 2,200, Rent 24,000, Interest expenses 3,500 — Net profit GH¢129,500.

(b) Balance Sheet as at 31 Dec 2020 balances fixed assets (net of depreciation), current assets (closing stock, debtors, prepaid electricity, cash) against capital (opening capital + net profit) and current liabilities (creditors, accrued rent, loan).

WAEC Accounting 2024 Theory — Question 8

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