The following transactions were extracted from the books of Odis Enterprises for the year ended 31st December 2018: 0) cash received from trade debtors N100,000
i. cash paid to suppliers N72,000
ii. expenses paid during the year were: rent- N2,500, general expenses N1,800
iv. cash of N5200 was withdrawn by the proprietor for personal use.
v. fixed assets valued at N8,000 on 31st December 2017 were to be depreciated at 10 per annum
Approach. This is an incomplete-records (single entry) question. We first find opening capital from a Statement of Affairs, reconstruct the cash book, derive credit sales and purchases from the debtors/creditors movements, then prepare the final accounts.
(a) Statement of Affairs as at 1st January 2018 (i.e. the position on 31st December 2017)
| Assets | N |
|---|
| Fixed assets | 8,000 |
| Stock | 15,900 |
| Trade debtors | 11,000 |
| Cash | 12,100 |
| Total assets | 47,000 |
| Less: Trade creditors | (4,000) |
| Opening capital | 43,000 |
(b) Cash Book (for the year ended 31st December 2018)
| Receipts | N | Payments | N |
|---|
| Balance b/d | 12,100 | Trade creditors (suppliers) | 72,000 |
| Trade debtors | 100,000 | Rent | 2,500 |
| | General expenses | 1,800 |
| | Drawings | 5,200 |
| | Balance c/d | 30,600 |
| 112,100 | | 112,100 |
Note: the closing cash of N30,600 is the balancing figure; it agrees with the closing net assets below, confirming the accounts are consistent.
Working - credit sales and purchases
Sales = cash from debtors + closing debtors - opening debtors \( = 100{,}000 + 13{,}000 - 11{,}000 = 102{,}000 \).
Purchases = cash to creditors + closing creditors - opening creditors \( = 72{,}000 + 6{,}500 - 4{,}000 = 74{,}500 \).
Depreciation on fixed assets \( = 10\% \times 8{,}000 = 800 \).
Rent expense = paid 2,500 + owing 500 = 3,000.
(c) Trading, Profit and Loss Account for the year ended 31st December 2018
| Particulars | N | N |
|---|
| Sales | | 102,000 |
| Less cost of sales: | | |
| Opening stock | 15,900 | |
| Add Purchases | 74,500 | |
| Goods available | 90,400 | |
| Less Closing stock | (17,000) | (73,400) |
| Gross profit | | 28,600 |
| Less expenses: | | |
| Rent (2,500 + 500 owing) | 3,000 | |
| General expenses | 1,800 | |
| Depreciation | 800 | (5,600) |
| Net profit | | 23,000 |
Check: Opening capital 43,000 + net profit 23,000 - drawings 5,200 = 60,800. Closing net assets = fixed assets 7,200 + stock 17,000 + debtors 13,000 + cash 30,600 - creditors 6,500 - rent owing 500 = 60,800. The two agree.
