Use the following to answer the given question UCHENNA ENTERPRISES: Balance sheet as at 31st December, 1993 \(\begin{array}{c|c} & N & N & & N \\ \hline Cap...
Question 1 Report
Use the following to answer the given question
UCHENNA ENTERPRISES: Balance sheet as at 31st December, 1993
\(\begin{array}{c|c} & N & N & & N \\ \hline Capital & 84,000 & & \text{Land and building} & 45,000 \\ \text{Add net profit} & 15,000 & 99,000 & \text{Furniture and Fittings} & 34,000 \\ \text{Less drawings} & & 9,000 & Stock & 28,000 \\ & & \overline{90,000} & debtors & 22,000 \\ debtors Creditors & & 25,000 & cash & 1,000 \\ Accruals & & 15,000 & & \\ & & \overline{130,000} & & \overline{130,000} \end{array}\)
Working capital amounts to
UCHENNA ENTERPRISES: Balance sheet as at 31st December, 1993
\(\begin{array}{c|c} & N & N & & N \\ \hline Capital & 84,000 & & \text{Land and building} & 45,000 \\ \text{Add net profit} & 15,000 & 99,000 & \text{Furniture and Fittings} & 34,000 \\ \text{Less drawings} & & 9,000 & Stock & 28,000 \\ & & \overline{90,000} & debtors & 22,000 \\ debtors Creditors & & 25,000 & cash & 1,000 \\ Accruals & & 15,000 & & \\ & & \overline{130,000} & & \overline{130,000} \end{array}\)
Working capital amounts to
Answer Details
Working capital refers to the amount of funds available for the day-to-day operations of a business. It is calculated as the difference between current assets and current liabilities.
In this case, the current assets are the sum of stock, debtors, and cash, which is N28,000 + N22,000 + N1,000 = N51,000. The current liabilities are the sum of creditors and accruals, which is N25,000 + N15,000 = N40,000. Therefore, the working capital is N51,000 - N40,000 = N11,000.
So, the answer is (E) N11,000.
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