Theory question 107
Incomplete RecordsOdum Ltd keeps his books on single entry basis and the following information relates to his business for the year 2014.
Assets and Liabilities (1st January 2014 / 31st December 2014, GH¢): Investment - / 1,000; Bills payable - / 300; Creditors 1,750 / 1,900; Debtors 2,100 / 3,400; Cash 150 / 200; Stock 1,000 / 1,250; Motor car 2,000 / 2,000; Loan from Nyadu - / 500
In addition, Odum withdrew an amount of GH¢500 and introduced GH¢200 additional capital.
(a) You are required to ascertain: (i) opening capital (ii) closing capital (iii) net profit.
(b) Prepare the Balance Sheet as at 31st December, 2014.
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(a)(i) Opening capital (statement of affairs, 1/1/14): motor car 2,000 + stock 1,000 + debtors 2,100 + cash 150 = 5,250 - creditors 1,750 = GH¢3,500.
(ii) Closing capital (31/12/14): motor car 2,000 + investment 1,000 + stock 1,250 + debtors 3,400 + cash 200 = 7,850 - (creditors 1,900 + bills payable 300 + loan 500) 2,700 = GH¢5,150.
(iii) Net profit = closing capital 5,150 + drawings 500 - additional capital 200 - opening capital 3,500 = GH¢1,950.
(b) Balance Sheet at 31 December 2014: Fixed assets - motor car 2,000; investment 1,000 = 3,000. Current assets - stock 1,250; debtors 3,400; cash 200 = 4,850. Total assets 7,850.
Capital 3,500 + additional capital 200 + net profit 1,950 - drawings 500 = 5,150; loan from Nyadu 500; current liabilities - creditors 1,900, bills payable 300 = 2,200. Total 7,850.
Profit = closing capital + drawings - capital introduced - opening capital.