JAMB Commerce 2009 Question 32

Question 32

Business Calculations

Ojo's Balance Sheet as at 31st December, 2006
Capital ₦10,000; Drawings ₦600 = ₦9 400; Profit ₦6 200 = ₦15 600; Creditors ₦1 800; Total ₦17 400
Land and building ₦12000; Fittings ₦850; Motor vans ₦1600; Cash ₦2150; Prepayments ₦700; Debtors ₦100; Total ₦17 400
10% is charged on depreciation of fixed assets.
What is Ojo's working capital?

A.₦2150
B.₦1950
C.₦1800
D.₦1150

Show the answer and explanation

Answer: D (₦1150)

Explanation

Current assets = cash 2 150 + prepayments 700 + debtors 100 = ₦2 950. Working capital = 2 950 − creditors 1 800 = ₦1 150.