The following transactions were extracted…

Question 1 Report

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 cash of N5200 was withdrawn by the proprietor for personal use.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

Additional information:

	31st December 2017	31st December 2018
Trade debtors	11,000	13,000
Trade creditors	4,000	6,500
Rent owing	-	500
Cash	12,100	30,000
Stock	15,900	17,000

You are required to prepare:
(a) Statement of Affairs as at 1st January 2018
(b) Cashbook
(c) Trading Profit and Loss Account for the year ended 31st December 2018.

Answer

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.

Read lesson note on Cashbook (JAMB)

Answer Details