Theory question 108
Business CalculationsCommerce 2 (answer any five questions)
WAZOBIA Enterprises financial position as at 31st December, 1996 is as follows:
Fixtures N1,000.00
Stock 31st December N8,000.00
Debtors N5,000.00
Creditors N3,000.00
Cash at hand N7,000.00
Bank overdraft N1,200.00
Typewriter N4,500.00
Furniture N2,500.00
Capital N18,000.00
One year co-operative loan N4,100.00
Profit for the year N1,700.00
Calculate: (a) Capital owned (b) Working capital (c) Current liabilities (d) Fixed capital (e) Capital employed
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Fixed assets: fixtures N1,000 + typewriter N4,500 + furniture N2,500 = N8,000.
Current assets: stock N8,000 + debtors N5,000 + cash N7,000 = N20,000.
Total assets = N28,000.
(a) Capital owned = capital + profit = N18,000 + N1,700 = N19,700 (check: total assets N28,000 − all liabilities N8,300 = N19,700).
(b) Working capital = current assets − current liabilities = N20,000 − N4,200 = N15,800.
(c) Current liabilities = creditors N3,000 + bank overdraft N1,200 = N4,200.
(d) Fixed capital = fixed assets = N8,000.
(e) Capital employed = fixed assets + working capital = N8,000 + N15,800 = N23,800 (= capital owned N19,700 + loan N4,100).
Group the items into fixed assets, current assets, current liabilities and long-term liabilities first. The one-year loan is treated as a long-term liability.