Theory question 107
Business CalculationsCommerce 2 (essay)
The following is a summary of the assets and liabilities of Odika Enterprises for the year ended December 31st 2000:
Premises N75,000
Motor vehicle N60,000
Fixtures and fittings N60,000
Machinery N65,000
Warehouse N18,000
Stock N20,000
Prepayment N10,000
Accrued expenses N12,000
Cash in hand N8,000
Cash at bank N6,000
Bank overdraft N3,500
Creditors N5,000
Debtors N6,000
(a) From the above figures, calculate the following, showing all workings:
(i) Capital owned (ii) Fixed assets (iii) Working capital
(b) List five sources of capital available to a public limited company
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(a)(i) Total assets = fixed assets 278,000 + current assets 50,000 = N328,000; total liabilities = accrued expenses 12,000 + bank overdraft 3,500 + creditors 5,000 = N20,500; capital owned = 328,000 − 20,500 = N307,500.
(ii) Fixed assets = premises 75,000 + motor vehicle 60,000 + fixtures and fittings 60,000 + machinery 65,000 + warehouse 18,000 = N278,000.
(iii) Current assets = stock 20,000 + prepayment 10,000 + cash in hand 8,000 + cash at bank 6,000 + debtors 6,000 = N50,000; current liabilities = N20,500; working capital = 50,000 − 20,500 = N29,500.
(b) Any five: issue of ordinary shares; preference shares; debentures; bank loans and overdrafts; retained profits (ploughed-back); trade credit; hire purchase/leasing; government grants; loans from finance houses.
Capital owned = total assets − total liabilities.