The following balances were extracted from the books of Zenith Nigeria Plc as at 31st December 2025:
| Account Item | Amount (₦) |
|---|---|
| Issued Share Capital (Ordinary shares of ₦1 each) | 500,000 |
| Share Premium | 50,000 |
| General Reserve | 30,000 |
| 10% Debentures | 100,000 |
| Non-Current Assets (Net Book Value) | 620,000 |
| Current Assets | 180,000 |
| Current Liabilities | 70,000 |
What is the balance of the Retained Earnings (Profit and Loss Account) as at 31st December 2025?
Answer: 50000 ₦
Answer
The balance of Retained Earnings as at 31st December 2025 is ₦50,000.
Under the company accounting framework, Net Assets equals total Shareholders' Equity. Total Assets of ₦800,000 less Current Liabilities of ₦70,000 and Non-Current Liabilities of ₦100,000 leaves Net Assets of ₦630,000. Subtracting the known equity items (Share Capital ₦500,000 + Share Premium ₦50,000 + General Reserve ₦30,000 = ₦580,000) yields the Retained Earnings balance of ₦50,000.
Step-by-Step Solution
Key Concept
Accounting Equation for Company Statement of Financial Position