The adjusted trial balance of a sole trader for the year ended 31 December 2020 includes the following items (all figures in $\text{₦}$):\n\nSales $\text{₦}1,200,000$\nPurchases $\text{₦}720,000$\nOpening Stock $\text{₦}150,000$\nClosing Stock $\text{₦}180,000$\nSalaries expense $\text{₦}120,000$\nRent expense $\text{₦}80,000$\nDepreciation - Building $\text{₦}60,000$\nInterest on loan $\text{₦}30,000$\nCapital $\text{₦}400,000$ (credit)\nDrawings $\text{₦}50,000$ (debit)\n\nIt is later discovered that depreciation on equipment of $\text{₦}40,000$ was omitted. Prepare the income statement and determine the amount of profit transferred to capital.

Question

The adjusted trial balance of a sole trader for the year ended 31 December 2020 includes the following items (all figures in $\text{₦}$):\n\nSales $\text{₦}1,200,000$\nPurchases $\text{₦}720,000$\nOpening Stock $\text{₦}150,000$\nClosing Stock $\text{₦}180,000$\nSalaries expense $\text{₦}120,000$\nRent expense $\text{₦}80,000$\nDepreciation - Building $\text{₦}60,000$\nInterest on loan $\text{₦}30,000$\nCapital $\text{₦}400,000$ (credit)\nDrawings $\text{₦}50,000$ (debit)\n\nIt is later discovered that depreciation on equipment of $\text{₦}40,000$ was omitted. Prepare the income statement and determine the amount of profit transferred to capital.

Accepted Answer

Profit transferred to capital = $\text{₦}180,000$.

Neco Model Questions Vol1 2017 Financial Accounting Question 29

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