Waec Model Questions Vol1 2018 Financial Accounting Question 3

A sole trader, Ade Enterprises, commenced operations on 1 January 2023 with a capital of ₦500,000. The following transactions were recorded during the month of January: 1. Purchased inventory on credit for ₦120,000. 2. Sold goods for ₦200,000 cash; the cost of goods sold was ₦140,000. 3. Paid salaries amounting to ₦30,000 in cash. 4. Paid ₦20,000 cash for rent. 5. Purchased a delivery van for ₦80,000 paying ₦30,000 cash and the balance on credit. 6. Received ₦50,000 from a debtor on account. 7. Paid ₦15,000 cash to a creditor. 8. Declared and paid a dividend of ₦10,000. 9. Recorded depreciation on the delivery van at ₦5,000 for the month. Using the above information, answer the following: a) Record the appropriate journal entries for each transaction. b) Post the entries to the T‑accounts for Cash, Purchases, Sales, Salaries Expense, Rent Expense, Delivery Van, Accumulated Depreciation – Delivery Van, Accounts Receivable, Accounts Payable, Capital and Drawings. State the closing balance of each account. c) Prepare a trial balance as at 31 January 2023. d) If the trial balance does not balance, identify the most likely source of error and suggest how it can be rectified.