Question 3
Final Accounts of a Sole TraderThe following balances were extracted from the books of XYZ Co. Ltd.
Goodwill: ₦20,000
Other Fixed Assets: ₦400,000
Stock: ₦10,000
Debtors: ₦30,000
Provision for bad debts: ₦5,000
Bank balance: ₦10,000
Sundry Creditors: ₦25,000
Accrued expenses: ₦5,000
Bills payable: ₦2,000
Provision for depreciation: ₦90,000
The working capital is
- A.₦45,000
- B.₦32,000
- C.₦25,000
- D.₦18,000
- E.₦13,000
Show the answer and explanation
Answer: E (₦13,000)
Explanation
Current assets 10,000 + (30,000 − 5,000) + 10,000 = 45,000; current liabilities 25,000 + 5,000 + 2,000 = 32,000; 45,000 − 32,000 = ₦13,000.