Theory question 101
Incomplete RecordsSection A (compulsory)
Adebola Abass operates a restuarant on cash basis. All cash received are banked after deducting the following expenses:
Staff wages: ₦2,000
Cash purchases: ₦500
Sundry expenses: ₦100
Drawings (weekly): ₦30
The following is the Bank Account:
Receipts: Balance b/d (1/1/90) ₦2,000; Restaurant takings ₦26,000; Investment income ₦2,000; total ₦30,000
Payments: Rent ₦500; Rates ₦400; Electricity ₦220; Telephone ₦50; Advertising ₦200; New Equipment ₦400; Insurance ₦50; Repairs ₦300; Cash paid to Creditors ₦20,000; Deposit on private house ₦750; Income Tax for Abass ₦200; Balance c/d ₦6,930; total ₦30,000
Additional Information (a) The balances extracted from the books are as follows (1/1/90 | 31/1/90): Accrued electricity ₦30 | ₦40; Trade Creditors ₦1,500 | ₦2,000; Rate prepaid ₦100 | ₦150; Stock ₦400 | ₦300 (b) Equipment at cost on 1/1/90 was ₦600; depreciation is to be provided at 10% per annum. (c) Adebola Abass occupies an apartment in the restaurant which attracts a rent of ₦120. You are required to prepare (i) Trading, Profit and Loss Account for the year ended 31st December 1990 and (ii) A Balance Sheet as at that date.
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Workings: takings = banked 26,000 + wages 2,000 + cash purchases 500 + sundry 100 + drawings (30 × 52) 1,560 = 30,160
Purchases = paid to creditors 20,000 + closing 2,000 − opening 1,500 = 20,500 credit + 500 cash = 21,000
Opening capital: equipment 600 + stock 400 + rates prepaid 100 + bank 2,000 − creditors 1,500 − accrued electricity 30 = ₦1,570
Drawings: cash 1,560 + income tax 200 + deposit on house 750 + private rent 120 = ₦2,630
(i) Trading, Profit and Loss Account for the year ended 31 December 1990: takings 30,160; cost of sales 400 + 21,000 − 300 = 21,100; gross profit ₦9,060; add investment income 2,000
Expenses: electricity (220 + 40 − 30) 230; rent (500 − 120) 380; rates (400 + 100 − 150) 350; telephone 50; advertising 200; insurance 50; repairs 300; depreciation 10% × 1,000 = 100; staff wages 2,000; sundry 100; total 3,760
Net profit ₦7,300
(ii) Balance Sheet as at 31 December 1990: equipment 1,000 − 100 = 900; stock 300; rates prepaid 150; bank 6,930; total ₦8,280
Capital 1,570 + 7,300 − 2,630 = 6,240; creditors 2,000; accrued electricity 40; total ₦8,280
Rebuild the takings from what was banked plus everything paid out of cash before banking.