This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
You're on a roll — To prepare the Statement of Profit or Loss for XYZ Ltd using the single-entry system, we need to calculate the opening and closing capital, and then adjust for drawings and additional capital. Step 1: Calculate Opening Capital as at January 1, 2023. Opening Capital = Opening Assets - Opening Liabilities Opening Assets: Stock: K19,000.00 Debtors: K12,000.00 Furniture & Fixtures: K16,500.00 Cash at Bank: K13,500.00 Total Opening Assets = 19,000 + 12,000 + 16,500 + 13,500 = K61,000.00 Opening Liabilities: Sundry Creditors: K14,500.00 Outstanding salaries: K1,200.00 Total Opening Liabilities = 14,500 + 1,200 = K15,700.00 Opening Capital: Opening Capital = 61,000 - 15,700 = K45,300.00 Step 2: Calculate Closing Capital as at December 31, 2023. Closing Capital = Closing Assets - Closing Liabilities Closing Assets: Stock: K20,000.00 Debtors: K15,500.00 Furniture & Fixtures: K12,000.00 Plant: K20,000.00 Total Closing Assets = 20,000 + 15,500 + 12,000 + 20,000 = K67,500.00 Closing Liabilities: Sundry Creditors: K13,000.00 Bank overdraft: K6,000.00 Total Closing Liabilities = 13,000 + 6,000 = K19,000.00 Closing Capital: Closing Capital = 67,500 - 19,000 = K48,500.00 Step 3: Prepare the Statement of Profit or Loss. XYZ Ltd Statement of Profit or Loss For the year ended 31 December 2023 | Particulars | Amount (K) | | :---------------------------------------- | :--------- | | Closing Capital (as at 31 Dec 2023) | 48,500 | | Add: Drawings during the year | 2,000 | | Adjusted Closing Capital | 50,500 | | Less: Opening Capital (as at 1 Jan 2023) | (45,300) | | Less: Additional Capital introduced | (500) | | Net Profit for the year | 4,700 | What's next?