Question Tag: Statement of Affairs

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:

The following activities took place during the 2018 accounting year:

• His drawings amounted to GH¢47,400. Winnings from a lottery of GH¢5,000 were put into the business.
• He bought extra Furniture for GH¢2,000.
• Furniture and Fittings is to be depreciated at GH¢2,175 for the 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)