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The double entry for partners’ drawings is to:
A. Debit appropriation account and credit drawings account
B. Debit partners’ current accounts and credit cash account
C. Debit cash account and credit appropriation account
D. Debit partners’ current accounts and credit appropriation account
E. Debit appropriation account and credit cash account
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When a proprietor of a business withdraws cash from the organization for private use, the proper postings are:
| DR | CR |
|---|---|
| A. Cash account | Drawings account |
| B. Drawings account | Capital account |
| C. Bank account | Drawings account |
| D. Drawings account | Cash account |
| E. Bank account | Cash account |
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A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were N225,000, N260,000, and N10,000 respectively. Determine the profit for the period.
A. N25,000
B. N45,000
C. N55,000
D. N65,000
E. N75,000
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A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were ₦225,000, ₦260,000, and ₦10,000 respectively.
How much will be the profit during the period?
A. ₦45,000
B. ₦50,000
C. ₦270,000
D. ₦485,000
E. ₦495,000
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The following information is obtained from the books of a sole trader:
(i) Opening capital as at January 1, 2015 N300,000
(ii) Closing capital as at December 31, 2015 N65,000
(iii) Additional capital introduced during 2015 N120,000
(iv) Cash withdrawn during 2015 N320,000
Calculate the profit or loss during the period.
A. N285,000 loss
B. N35,000 loss
C. N35,000 profit
D. N225,000 profit
E. N522,500 profit
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Mr. Mala, the proprietor of a small bookshop, has requested you to prepare his accounts. He did not keep complete records of account. From his passbook, notebook, bank statements, and oral information obtained during a meeting with him, you put together the following figures for the year ended December 31, 2015:
| Item | January 1, 2015 (N’000) | December 31, 2015 (N’000) |
|---|---|---|
| Cash in hand | 400 | 890 |
| Bank overdraft | 18,000 | 14,000 |
| Furniture & Fittings | 2,000 | 2,000 |
| Delivery van | 3,600 | 3,600 |
| Inventories | 20,400 | 22,400 |
| Trade receivables | 12,400 | 9,800 |
| Trade payables | 9,120 | 8,400 |
| Bills payables | 2,210 | 2,200 |
| Bills receivables | 3,100 | 3,200 |
During the year, Mr. Mala used part of the inventories for domestic affairs which was agreed at N1,200,000. He drew cash for private expenses at frequent intervals. He estimated his drawing in cash at N2,800,000 for the year.
He also agreed with the following suggestions:
Required:
a. Ascertain Mr. Mala’s bookshop’s profit or loss for the year ended December 31, 2015. (8 Marks)
b. Prepare the statement of financial position of the bookshop at December 31, 2015. (12 Marks)
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Ajonibode runs a business as a sole trader and the following information relates to the business:
On January 1, 2015, the net assets of the business were N1,675,000. During the year to December 31, 2015, the business made a profit of N625,000 and Ajonibode took out N550,000 in drawings. Due to a shortage of cash, he paid in additional capital of N100,000 in early December 2015.
What are the net assets of the business as of December 31, 2015?
A. N1,675,000
B. N1,850,000
C. N2,300,000
D. N2,400,000
E. N2,950,000
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A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were N225,000, N260,000, and N10,000 respectively. Determine the profit for the period.
A. N25,000
B. N45,000
C. N55,000
D. N65,000
E. N75,000
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Adu, Boateng, and Dogbe are trading in partnership under an agreement which provides for interest on partners’ capital accounts at the rate of 10% per annum, annual salaries of GHȼ7,500 and GHȼ4,000 for Boateng and Dogbe respectively, and the balance of the profit or loss shared among Adu, Boateng, and Dogbe in the proportion 5:3:2 respectively.
Partners’ cash drawings for the year ended 30 April 2021 were as follows:
| Partner | Amount (GHȼ) |
|---|---|
| Adu | 8,000 |
| Boateng | 5,000 |
| Dogbe | 6,000 |
The draft Statement of Financial Position as at 30 April 2021 of Adu, Boateng, and Dogbe is as follows:
After the preparation of the draft final accounts for the year ended 30 April 2021, which disclosed a net loss of GHȼ10,500, it was discovered that:
The partners have now decided that an allowance for receivables should be 4% of trade receivables.
Required:
a) Compute the revised net profit or loss of the partnership for the year ended 30 April 2021. (5 marks)
b) Prepare the revised partners’ current accounts for the year ended 30 April 2021. (Note: the partners’ current accounts should commence with the balances shown in the draft partnership Statement of Financial Position as at 30 April 2021). (7 marks)
c) Redraft the Statement of Financial Position of the partnership as at 30 April 2021. (8 marks)
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a) A company owns a number of properties which are rented to tenants. The following information is available for the year ended 30 June 2021:
| Date | Rent in advance (GHȼ) | Rent in arrears (GHȼ) |
|---|---|---|
| 30 June 2020 | 140,500 | 5,200 |
| 30 June 2021 | 148,200 | 9,200 |
Cash received from tenants for the year ended 30 June 2021 was GHȼ820,400. All rent in arrears was subsequently received.
Required:
Prepare the ledger account for rental income showing the transfer to the Statement of Profit and Loss, for the year ended 30 June 2021. (5 marks)
b) Awuni, Adjetey, and Kwame are in partnership, running an evening school, and sharing residual profits and losses in the ratio 4:3:3 respectively. At 1 October 2021 their capital and current account balances were:
By formal agreement, the partners are entitled to receive interest at 5% on capital. In addition, Adjetey is paid an annual salary of GHȼ5,455 for his part in running the business.
On 1 April 2022, by mutual agreement, Kwame increased his capital by paying a further GHȼ4,000 into the partnership bank account. Awuni reduced his capital by GHȼ5,000, but kept this in the partnership as a loan bearing interest at 10% per annum. Interest on the loans, by agreement, is credited to Awuni’s current account.
The partners are allowed to take out drawings at any time during the year, but they have agreed to charge interest on such drawings. The date of taking out the drawings, the amount drawn out by each partner, and the interest payable, were as follows during the year to 30 September 2022:
Required:
i) Prepare the profit and loss appropriation account for the year ended 30 September 2022. (8 marks)
ii) Prepare the partners’ current accounts for the year ended 30 September 2022. (7 marks)
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Kofi Badu, a sole trader, extracted the following Trial Balance from the business books as of 30 April 2019:
The following information is also relevant:
i) The closing inventory as at 30 April 2019 was valued at GH¢8,010.
ii) As at 30 April 2019, accrued rent income for the year amounted to GH¢420; heat and light accrued was GH¢260; whilst salaries of GH¢720 was paid in advance.
iii) During the year, Kofi Badu had withdrawn goods costing GH¢720 for his personal use. This had not been recorded in the accounts.
iv) New equipment costing GH¢2,650 was purchased during the year but had been mistakenly included in purchases. This is yet to be corrected.
v) A cheque for GH¢440 received from a customer in full settlement of a debt of GH¢450 has not yet been entered in the accounts.
vi) Allowance for doubtful debt is to be maintained at 2% of receivables.
vii) Depreciation is to be provided for as follows:
Required:
a) Prepare a statement of profit or loss for Kofi Badu for the year ended 30 April 2019.
(12 marks)
b) Prepare a statement of financial position for Kofi Badu as at 30 April 2019.
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a) Mr. Preprah is a dealer in spare parts who has not kept proper books of accounts. As at 31 December 2017, the following balances were available:
| Description of Assets | GH¢ |
|---|---|
| Cash in hand | 1,500 |
| Cash at bank | 15,000 |
| Inventories | 17,440 |
| Trade receivables | 8,540 |
| Trade payables | 9,520 |
| Motor Vehicle (at valuation) | 45,000 |
| Furniture and Fittings | 14,500 |
The following activities took place during the 2018 accounting year:
As at 31 December 2018, his assets and liabilities apart from Furniture and Fittings were as follows:
Cash in hand 1,000
Bank overdraft 12,000
Inventory 12,845
Trade receivables 5,750
Trade payables 5,290
Motor Vehicle to be valued at 40,000
Prepaid rent 10,000
Required:
i) Prepare the Statement of affairs for December 2017. (2 marks)
ii) Prepare the statement of financial position (showing the movements in retained earnings
made by Mr Preprah) as at 31 December 2018. (5 marks)
b) ABC Ltd started business on 1/1/14, and its financial year ends on 31 December each year.
It had the following Machinery as at December 2018.
GH¢
2014 January 1, bought one machine costing 130,000
2015 June 30, bought one machine costing 780,000
2015 October 1, bought two machines costing 1,040,000 each
2017 April 1, bought one machine costing 520,000
2018 March 1, bought two machines costing 1,170,000 each
The company’s policy is to depreciate assets at a rate of 15% per annum on a straight line
basis proportionate to the date of purchase.
Required:
Prepare:
i) The assets accounts (2014-2018); (4 marks)
ii) Provision for depreciation account (2014-2018); and (6 marks)
iii) Statement of financial position extract for each year from 2014 to 2018. (3 marks)
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STL has been in business for a number of years. In the past year, she has been busy training for the Olympics and has not kept proper records for her business. She has given you some information.
The balances as at 1 May 2016 are as follows:
The balance on the bank statement at 30 April 2017 was GH¢1,144. There were no timing differences.
You are given the following additional information:
i) Closing inventory is valued at GH¢1,324.
ii) STL took goods which had a cost of GH¢96 and would have been sold for GH¢124 for her own personal use.
iii) A telephone bill was received on 7 July 2017 for GH¢75, this related to the quarter ended 30 June 2017.
iv) Rent includes GH¢1,000 paid on 1 January 2017 for the year to 31 December 2017.
v) STL takes GH¢60 every week out of the takings before banking them. She also spends GH¢20 every week on petrol for the company van.
vi) Depreciation is to be charged at 15% reducing balance.
vii) Closing trade receivables and payables were GH¢2,072 and GH¢967 respectively. However, one customer, Caroline, has vanished and her debt of GH¢575 is not likely to be paid.
viii) STL always keeps a cash float of GH¢50.
ix) STL makes sales to cash and credit customers. Customers taking credit always pay by cheque or bank transfer.
Required:
a) Prepare the statement of profit or loss for STL for the year ended 30 April 2017. (12 marks)
b) Prepare the statement of financial position for STL as at 30 April 2017. (8 marks)
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