WAZOBIA Enterprise's financial position as at 31st... | WAEC SSCE - Commerce - 1999 (Essay)

Question 1 Report

WAZOBIA Enterprise's financial position as at 31st December, 1996 is as follows:

Calculate:
(a) Capital owned
(b) Working capital
(c) Current liabilities
(d) Fixed capital
(e) Capital employed.

Answer

Answer Details

WAZOBIA Enterprise as at 31st December, 1996

First classify each item:

Fixed assets = 1,000 + 4,500 + 2,500 = N8,000

Current assets = 8,000 + 5,000 + 7,000 = N20,000

Total assets = 8,000 + 20,000 = N28,000

(The N8,000 listed as "capital" is a book figure; capital owned is recalculated below from the assets and liabilities.)

(a) Capital owned = Total assets - Total external liabilities

= 28,000 - (3,000 + 1,200) = 28,000 - 4,200 = N23,800

(b) Working capital = Current assets - Current liabilities

= 20,000 - 4,200 = N15,800

(c) Current liabilities = Creditors + Bank overdraft = 3,000 + 1,200 = N4,200

(d) Fixed capital = value of fixed assets = N8,000

(e) Capital employed = Fixed assets + Working capital = 8,000 + 15,800 = N23,800

(Check: Total assets - Current liabilities = 28,000 - 4,200 = N23,800.)

WAZOBIA Enterprise's financial position as at 31st December, 1996 is as follows: N fixtures 1,000.00 stock 31st december 8,000.00 Debtors 5,000.00 Creditors...