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Zorluk: Çok zorStatement of Affairs Method for Capital and Profit Determination

Mrs. Adebayo operates a retail provision store without keeping a full set of accounting books. On 1 January 2024, her financial position was as follows: Premises ₦500,000, Motor Van ₦200,000, Inventory ₦80,000, Trade Debtors ₦45,000, Prepaid Rent ₦5,000, Trade Creditors ₦60,000, Accrued Electricity ₦10,000, and Bank Overdraft ₦20,000.

On 31 December 2024, her financial position showed: Premises ₦500,000, Motor Van (net of 10% depreciation on cost) ₦180,000, Inventory ₦110,000, Trade Debtors (gross ₦60,000 less 5% provision for doubtful debts) ₦57,000, Cash in Hand ₦15,000, Trade Creditors ₦50,000, and Accrued Wages ₦8,000.

During the year, Mrs. Adebayo introduced additional capital of ₦50,000 into the business. She also withdrew ₦3,000 per month in cash and goods worth ₦4,000 for her personal use.

What is the net profit earned by the business for the year ended 31 December 2024?

  1. A
    ₦74,000
  2. B
    ₦69,000
  3. ₦54,000Cevap
  4. D
    ₦14,000

Cevap

The net profit earned by the business for the year ended 31 December 2024 is ₦54,000.
The correct answer of ₦54,000 is derived by establishing Opening Capital (₦740,000) and Closing Capital (₦804,000) from their respective statement of affairs balances. Adjusting Closing Capital by adding total drawings (₦40,000) and subtracting additional capital introduced (₦50,000) yields an adjusted closing equity of ₦794,000. Subtracting the opening capital of ₦740,000 results in a net profit of ₦54,000.

Adım Adım Çözüm

1
Calculate Opening Capital as of 1 January 2024
Total Opening Assets = ₦500,000 + ₦200,000 + ₦80,000 + ₦45,000 + ₦5,000 = ₦830,000. Total Opening Liabilities = ₦60,000 + ₦10,000 + ₦20,000 = ₦90,000. Opening Capital = ₦830,000 - ₦90,000 = ₦740,000.
Opening Capital is computed by taking Total Assets minus Total Liabilities at the start of the accounting period.
2
Calculate Closing Capital as of 31 December 2024
Total Closing Assets = ₦500,000 + ��180,000 + ₦110,000 + ₦57,000 + ₦15,000 = ₦862,000. Total Closing Liabilities = ₦50,000 + ₦8,000 = ₦58,000. Closing Capital = ₦862,000 - ₦58,000 = ₦804,000.
Closing Capital is computed by taking net valuation of assets minus liabilities at the end of the accounting period.
3
Determine total drawings made during the year
Cash drawings = ₦3,000 × 12 = ₦36,000. Goods drawn = ₦4,000. Total Drawings = ₦36,000 + ₦4,000 = ₦40,000.
Drawings include both cash taken periodically and inventory consumed for personal use.
4
Apply the Statement of Affairs profit formula
Net Profit = (Closing Capital + Drawings - Additional Capital) - Opening Capital = (₦804,000 + ₦40,000 - ₦50,000) - ₦740,000 = ₦794,000 - ₦740,000 = ₦54,000.
To arrive at profit, capital introduced must be removed from the capital growth while owner withdrawals must be restored.

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Statement of Affairs Method for Capital and Profit Determination
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