Question

Yinsongya, a sole proprietor trading as Yinsongyasco Trading Enterprise requested Yintomya
and Company, a firm of Chartered Accountants (where you are employed as a trainee
accountant) to prepare the accounts of her business for the year ended 31st December 2019.Your
audit manager assigned this work to you.
Your interview with Yinsongya and the scrutiny of her records revealed the following:-
i) She did not maintain double entry book-keeping system.
ii) All sales were on credit basis. During the year Yinsongya received GH¢9,025,000
andGH¢475,000 in cheques and cash respectively from her customers. The cash was not
banked
iii) Suppliers of goods during the year were paid GH¢6,840,000 by cheque.
iv) Yinsongya rented two premises at Tongo and Bawku for residential and business
purposes respectively. In July, 2018 she paid GH¢480,000 at two years rent advance for
her residence. In July 2019 she again paid by cheque GH¢600,000 to CB cover one year
advance for her residence. The rent for the premises at Bawku was GH¢60,000 per month
in 2019. Yinsongya always paid all her rent by cheque.
v) General business expenses paid by cheque came up to GH¢106,200
vi) She also took cash of GH¢38,000 every month for her private use.
vii) Yinsongya was able to provide the following information:
31/12/19 31/12/18
GH¢ GH¢
Trade debtors 1,254,000 1,045,00
Trade creditors 617,500 380,000
Rent owing 60,000 120,000
Cash at Bank 3,000,000 1,073,500
Cash on Hand 60,000 76,000
Stock 1,700,500 1,510,500
viii) Fixtures and fittings held at 31st December 2018 were valued GH¢920,000.
ix) Depreciations to be provided annually at the rate of 20%
x) Yinsongya agreed to pay GH¢100,000 as accountancy fees.
xi) Differences in cash and bank balance at the end of 2019 represent additional drawings
and not proceeds received by Yinsongya on the funeral of her late uncles respectively.
REQUIRED:
a) Cash and Bank Accounts for 2019
b) Computation of the profit of Yinsongya using the net worth method
c) Trading, Profit and Loss Account for the year ended 31st December 2019

Answer 1

A)

Cash Account
Particulars	Amount	Particulars	Amount
Opening Bal.	76,000.00
Debtors	4,75,000.00	Fixed Drawings	4,56,000.00
		Drawings	35,000.00
		Closing Bal.	60,000.00
Total	5,51,000.00	Total	5,51,000.00
Drawings respresent the balancing figure
Bank Account
Particulars	Amount	Particulars	Amount
Opening Bal.	10,73,500.00	Creditors	68,40,000.00
Debtors	90,25,000.00	Rent(Residential)	6,00,000.00
Share Capital	11,67,700.00	Rent	7,20,000.00
		General Exp.	1,06,200.00
		Closing Bal.	30,00,000.00
Total	1,12,66,200.00	Total	1,12,66,200.00
Rent of 4,80,000 is not included as it was paid last year
Share capital is balancing amount

   Rent(Residential):represents the rent for residential property

B)

Networth is Calculated as follows:
Networth	Closing	Opening
Add:
Debtor	12,54,000.00	1,04,500.00
Cash	30,00,000.00	10,73,500.00
Bank	60,000.00	76,000.00
Stock	17,00,500.00	15,10,500.00
Less:
Creditor	6,17,500.00	3,80,000.00
Rent	60,000.00	1,20,000.00
Accounting Charges		1,00,000.00
Networth	53,37,000.00	21,64,500.00
Profit =Networth at the openning - Networth at closing
Profit	31,72,500.00

C)

Trading Account
Particulars	Amount	Particulars	Amount
Opening Stock	15,10,500.00
Purchase	70,77,500.00	Sale	95,20,000.00
		Closing Stock	17,00,500.00
Gross Profit	26,32,500.00
Total	1,12,20,500.00	Total	1,12,20,500.00
Profit & Loss Account
Particulars	Amount	Particulars	Amount
		Net Profit	26,32,500.00
General exp.	1,06,200.00
Accounting fees O/S	1,00,000.00
Depriciation	1,84,000.00
Rent	7,20,000.00
Net Profit	15,22,300.00
Total	26,32,500.00	Total	26,32,500.00