Theory question 103
Incomplete Records3. The following is the summarised Cash Book of James Nwanagwu for the year ended 31st March, 1995:
Receipts: Opening balance N2,343; Cash from debtors N18,235; Additional capital N6,000; total N26,578
Payments: Cash paid to creditors N11,056; Salaries N1,080; Postages and stationery N240; General expenses N1,234; Drawings N2,500; Rent and rates N570; Balance c/d N9,898; total N26,578
Additional Information – Balances (1st April, 1994; 31st March, 1995):
Stock: N560; N340
Debtors: N1,202; N988
Creditors: N980; N1,051
Accrued salaries: N420; N75
Prepaid rent: N44; N67
You are required to prepare:
(a) Statement of Affairs as at 1st April, 1995;
(b) Debtors and Creditors Control Accounts;
(c) Trading, Profit and Loss Accounts;
(d) Balance Sheet as at 31st March, 1995.
Show the model answer
(a) Statement of affairs at 1st April 1994: stock 560 + debtors 1,202 + prepaid rent 44 + cash 2,343 = 4,149; less creditors 980 and accrued salaries 420; opening capital 2,749.
(b) Debtors control: balance b/f 1,202 + credit sales 18,021 = cash received 18,235 + balance c/d 988. Creditors control: cash paid 11,056 + balance c/d 1,051 = balance b/f 980 + purchases 11,127.
(c) Trading: sales 18,021; opening stock 560 + purchases 11,127 − closing stock 340 = 11,347; gross profit 6,674.
Profit and loss: salaries 1,080 + 75 − 420 = 735; rent and rates 570 + 44 − 67 = 547; postage and stationery 240; general expenses 1,234; total 2,756; net profit 3,918.
(d) Balance sheet at 31/3/95: stock 340, debtors 988, prepaid rent 67, cash 9,898 = 11,293; less creditors 1,051 and accrued salaries 75 = 10,167.
Capital 2,749 + additional capital 6,000 + net profit 3,918 − drawings 2,500 = 10,167.
Find opening capital from the statement of affairs, then use the control accounts to turn cash figures into sales and purchases.