Chapter 13: Incomplete Records

I. INTRODUCTION
Incomplete records problems involve with individuals running small businesses such as a
newsagent or greengrocer that not keep all of the accounting records we have studied or
have a detailed understanding of double entry bookkeeping.

If a business does not have a full set of accounting records, the preparation of the statement
of profit or loss and statement of financial position may require some figures to be
ascertained from other records and information.

II. Cost structures

Cost structure information is usually expressed in one of two ways, either as a margin or a
mark-up.

1. Mark-up
Mark-up expresses profit as a percentage of cost, e.g. a mark-up of 25% means that profit
is 25% of the cost figure. In a 25% mark-up situation the following cost structure would apply:

2. Margin
Margin expresses profit as a percentage of selling price e.g. margin of 25% means that 25%
of the selling price is profit. In a 25% margin situation the following cost structure would
apply:

Remember that:

Example 1:
W Co has on average a profit margin of 40%. In 20X7 sales total $476,000.
What is cost of sales?
$ %
Sales
Cost of sales
Gross profit

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Example 2:
If a business has sales of $6,000 and a margin of 20%, what is the gross profit?

$ %
Sales
Cost of sales
Gross profit

Example 3:
Y Co. operates with a standard mark-up of 30% and has the following information available
for 2019.

What is the value for purchases in 2019?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

Example 4:
A business has opening inventories of $273 and makes purchases during the year of $2,781.
The proprietor removes goods costing $87 for his own use. The business achieves a
constant mark-up of 20% on cost and records sales for the year of $3,360.

What is the cost of closing inventories?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

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III. Accounting equation to derive missing information
If given a list of opening and closing balances for assets and liabilities, you can determine
opening and closing capital.

This is done from the Accounting Equation:

Assets – Liabilities = Capital (Net assets)

Opening capital and closing capital are also linked by the following equation:

Closing capital = Opening capital + Capital introduce + Profits - Drawings

This can be rearranged as:

Closing capital - Opening capital = Capital introduce + Profits - Drawings

“Closing Net Assets minus Opening Net Assets” is often referred to as the “Change in Net Assets”.

Change in Net Assets = Capital introduce + Profits - Drawings

What figure you have to determine and which equation(s) you use will be dependent on the
information provided. But you do need to know and understand these relationships. You will
be given sufficient information such that there is only one unknown

Example 1:
Vira runs a small food business and has kept no accounting records in the year ended 31
December 2019. She knows that she has taken $6,800 cash out of his business during the
year plus inventory which cost the business $250. She further invested $20,000 into the
business in February to get a motor vehicle for delivery.

Vira knows that at the last year end her business had assets of $40,000 and liabilities of
$14,600. She has also calculated that the assets of the business at 31 December 2019 are
worth $56,000 and the liabilities $18,750.

What profit or loss has Vira made in the year 2019?

Closing capital = Opening capital + Capital introduce + Profits - Drawings

Net assets at 1 January 2019 =

Plus: capital introduce during year =

Plus: profits for year =

Less: drawings in year =

Net assets at 31 December 2019 =

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IV. Missing figures using ledgers
1. Overview
Another type of incomplete record activity that may come up revolves around reconstructing
ledger accounts to derive missing information.

Examples are as follows:

This type of task is a test double entry bookkeeping skill.

Remember that under the duality convention there are two aspects to every transaction, i.e.
for every $1 of debit you must recognize $1 of credit!

2. Missing sales figures

The credit sales figure can be derived from preparing a trade receivables’ ledger control
account. The idea is to insert into the ledger account all known information, and then to
derive the missing information as a balancing figure.

This can be simplified using the following pro-forma control account:

For example, suppose that Joe Han's business had trade accounts receivable of $1,750 on
1 April 20X4 and trade accounts receivable of $3,140 on 31 March 20X5. If payments
received from receivables during the year to 31 March 20X5 were $28,490, and if there are
no irrecoverable debts, then credit sales for the period would be:

The same interrelationship between credit sales, cash from receivables, and opening and
closing receivables balances can be used to derive a missing figure for cash from
receivables, or opening or closing receivables, given the values for the three other items.

For example, if we know that opening receivables are $6,700, closing receivables are $3,200
and credit sales for the period are $69,400, then cash from receivables during the period
would be as follows.

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3. Missing purchases figures
The credit purchases figure can be derived from using a trade payables’ ledger control
account. The idea is to insert into the ledger account all known information, and then to
derive the missing information as a balancing figure.

This can be simplified using the following pro-forma control account:

For example, suppose that Joe Han's business had trade payables of $3,728 on 1 October
20X5 and trade payables of $2,645 on 30 September 20X6. If payments to trade payables
during the year to 30 September 20X6 were $31,479, then purchases during the year would
be:

Example 2:
Joe Clinton has not kept a proper set of accounting records during 20X1 due to the prolonged
illness of his bookkeeper. However, the following information is available.

Calculate Joe Clinton's purchases figure for the trading account for 20X1.

Example 3:
Foxtrot does not maintain a full set of accounting records and needs to identify the total cost
of purchases made on credit during 20X3. It had trade payables outstanding of $45,234 at
1 January 20X3, and $48,321 at 31 December 20X3. Payments made to suppliers during
20X3 totalled $590,164, and discount received for early settlement was $5,729. Returns
outwards during the year amounted to $3,600. In addition, a contra of $4,500 had been
agreed with a supplier who was also credit customer of Foxtrot.

Prepare a trade payables’ ledger control account for 20X3 and derive Foxtrot’s total
cost of purchases for 20X3.

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4. Missing expenses figures
As with the sales and purchases, a ledger account is prepared which includes all known
figures. The missing figure is the amount required to make the account balance.

This can be simplified using the following ledger account:

For example, suppose that on 1 April 20X6 a business had prepaid rent of $700 which relates
to the next accounting period. During the year to 31 March 20X7 it pays $9,300 in rent, and
at 31 March 20X7 the prepayment of rent is $1,000. The cost of rent in the I&E account for
the year to 31 March 20X7 would be the balancing figure in the following T-account.

(Remember that a prepayment is a current asset, and so is a debit balance b/f.)

Similarly, if a business has accrued telephone expenses as at 1 July 20X6 of $850, pays
$6,720 in telephone bills during the year to 30 June 20X7, and has accrued telephone
expenses of $1,140 as at 30 June 20X7, then the telephone expense to be shown in the
statement of profit or loss for the year to 30 June 20X7 is the balancing figure in the following
T-account.

(Remember that an accrual is a current liability, and so is a credit balance b/f.)

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5. Cash and bank summaries
It is common for questions on incomplete records to include a summary of the cash and
bank transactions. Such a summary is called a receipts and payments account. Very often
there is a figure missing from the summary. Preparing a ledger account enables the missing
figure to be derived.

This can be simplified using the following ledger accounts.

Example 1:
On 1 January Elma Fudd’s bank account is overdrawn by $1,367. Payments in the year
totalled $8,536 and on 31 December the closing balance is $2,227 (positive).

What are total receipts for the year?

Example 2:
On 1 January, Daisey Chain's business had a cash float of $900. During the year cash of
$10,000 was banked, $1,000 was paid out as drawings and wages of $2,000 were paid. On
31 December the float was $1,000.

How much cash was received from customers for the year?

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 1 C 11 D 21 A 31 B 41 24000

2 A 12 A 22 A 32 32165 42 A

3 D 13 C 23 D 33 106250 43 C

4 D 14 C 24 A 34 B 44 C

5 B 15 A 25 C 35 23000 45 96000

6 29125 16 B 26 D 36 240000 46 365442

7 D 17 B 27 A 37 115000 47 10546

8 63380 18 116700 28 B 38 B 48 D

9 53370 19 C 29 141340 39 B

10 D 20 C 30 C 40 B

Opening statement

1 Which of the following correctly calculates closing capital?

A Capital introduced - Drawings - Profit - Opening capital

B Capital introduced + Drawings - Profit + Opening capital

C Capital introduced - Drawings + Profit + Opening capital

D Capital introduced + Drawings + Profit + Opening capital

Closing capital = Opening capital + Capital introduce + Profits - Drawings

2 Albert does not keep full accounting records. His last accounts show that his capital balance was
$42,890. At the year-end he calculated that his assets and liabilities were:
$
Non-current assets 41,700
Inventory 9,860
Receivables 7,695
Payables 4,174
Bank overdraft 5,537
On reviewing his calculations, you note that he not include $258 of unpaid invoices for expenses.

What is the value of Albert's closing capital?

A $49,286

B $49,544

C $60,360

D $60,876

Assets – Liabilities = Capital (Net assets)

3 Which of the following correctly calculates the difference between closing capital and opening
capital?

A Profit - capital introduced - drawings

B Profit + capital introduced + drawings

C Profit - capital introduced + drawings

D Profit + capital introduced - drawings

Closing capital = Opening capital + Capital introduce + Profits - Drawings

4 In the last 12 months, Jenna's capital balance increased by $6,798. In the year her drawings totalled
$14,600 and she introduced additional capital of $2,900.

What is Jenna's net profit or loss for the year?

A $4,902 loss

B $18,498 loss

C $4,902 profit

D $18,498 profit

Closing capital = Opening capital + Capital introduce + Profits - Drawings

5 At 1 September 20X1 the balance on Hai's capital account was $31.754. In the year to 31 August
20X2 he invested an additional amount of $40,000 of personal funds and took a loan of $80,000 for
the business. The statement of profit or loss for the year to 31 August 20X 2 reported a profit of
$48,634 and Hai's drawings during the year were $28,500.

What is Hai's closing capital balance at 31 August 20X2?

A $43,254

B $91,888

C $123,254

D $151,754

Closing capital = Opening capital + Capital introduce + Profits - Drawings

6 At 1 November 20X8 the value of Claudia's net assets was $127,554. At 31 October 20X9 the value
was $174,529. During the year to 31 October 20X9 Claudia introduced $35,000 of capital and her
drawings were $17,150.

What was Claudia's profit for the year to 31 October 20X9?

Closing capital = Opening capital + Capital introduce + Profits - Drawings

7 A business had net assets of $75,600 at 1 January 20X4. Net profit for the year, after deducting
owner’s drawings of cash and goods, was $3,200. Owner paid herself a monthly salary of $1,000 and
also withdrew for her own use goods costing $2,300 and with a selling price of $2,600. No additional
capital was introduced during the year.

What were the net assets at 31 December 20X4?

A $64,200

B $64,500

C $75,500

D $78,800

Closing capital = Opening capital + Capital introduce + Profits - Drawings

8 Andrew's trial balance at 31 October 20X7 includes the following:

$
Machinery at cost 85,800
Accumulated depreciation on machinery 21,750
Trade receivables 42,650
Receivables allowance 1,570
Bank overdraft 6,470
Inventory at 1 November 20X6 21,650

His inventory at 31 October 20X7 is valued at $22,300.

What value should be reported for current assets in Andrew's statement of financial position
at 31 October 20X7?

Assets – Liabilities = Capital (Net assets)

9 At 30 November 20X9, Marek's trial balance includes the following balances:

$ $
Inventory at 01 December 20X8 17,558
Trade receivables 31,749
Prepayments 3,629
Trade payables 24,928
Accruals 5,291
Bank account 1,827
Receivables allowance at 01 December 20X8 683

Inventory at 30 November 20X9 is valued at $18,736, and the receivables allowance is to be adjusted to
$744.

What value should be reported on Marek's statement of financial position at 30 November

20X9 for current assets?

Assets – Liabilities = Capital (Net assets)

 Credit Sales and trade accounts receivable

10 The amount owed to Jane by her customers at 31 October was $34,729. A year earlier she was owed
$27,641. During the year Jane had lodged $327,684 to her bank account. This included payments
received from her customers as well as $45,000 which Jane had received from the sale of her holiday
home.

What was the value of Jane's sales for the year to 31 October?

A $334,772

B $327,684

C $282,684

D $289,772
11 The following information relates to Exports Co's financial statements for the year ended 31 December
20X9:

$
Receivables balance b/f at 1 January 20X9 7,000
Cash received from trade accounts receivable 29,840
Cash sales 5,370
Discounts allowed 30
Contra with payables control account (to offset an amount due from
60
a supplier)
Receivables balance c/f at 31 December 20X9 9,320

What was the value of Exports Co’s credit sales in the year to 31 December 20X9?

A $22,240

B $26,760

C $26,880

D $32,250
12 Olivia has attempted to write up her ledger accounts, but is very confused about debits and credits. She
realises she has made some mistakes and has asked you to correct the following receivables ledger control
account:

RECEIVABLES CONTROL ACCOUNT

$ $
Balances b/f 8,024 Cash sales 4,430
Cash received from credit 55,212
Sales on credit 63,728
customers
Irrecoverable debt written off 434
Discount allowed 2,328 Balances c/f 14,872
74,514 74,514

The opening balance is correct. What was the closing balance?

A $13,778

B $14,872

C $18,208

D $19,302
 Purchases and trade accounts payable

13 The following information relates to Imports Co's financial statements for the year ended 31 December
20X8:

$
Payables balance b/f at 1 January 20X8 16,970
Cash paid to credit suppliers 79,500
Early settlement discounts received 3,750
Contra with receivables control account (to offset an amount due
4,000
from a customer)
Payables balance c/f at 31 December 20X8 12,920

What was the value of Imports Co’s credit purchases in the year to 31 December 20X8?

A $73,600

B $81,100

C $83,200

D $89,200
14 Chloe has attempted to write up her ledger accounts, but is very confused about debits and credits. She
realises she has made some mistakes and has asked you to correct the following payables ledger control
account:

PAYABLES CONTROL ACCOUNT

$ $
Cash purchases 4,430 Balances b/f 8,024
Cash paid to credit suppliers 55,212 Purchases on credit 63,728
Returns outwards 434
Balances c/f 14,872 Discount received 2,328
74,514 74,514

The opening balance is correct. What is the closing balance?

A $19,302

B $14,872

C $13,778

D $18,208
15 Your payables ledger control account has a balance at 1 October 20X8 of $34,500 credit. During
October, credit purchases were $78,400, cash purchases were $2,400 and payments made to
suppliers, excluding cash purchases, and after deducting cash discounts of $1,200, were $68,900.
Purchase returns were $4,700.

What was the closing balance?

A $38,100

B $40,500

C $47,500

D $49,900
16 At 31 October 20X6 Gina Dobbs owed her suppliers $13,856. During the year to 31 October 20X7,
her payments to suppliers totalled $95,886, and at 31 October 20X7 she owed $11,552.

What is the value of Gina's credit purchases for the year to 31 October 2DX7?

A $70,478

B $93,582

C $98,190

D $121,294
17 The payables ledger control account balance at 1 January 20XO was $10,000.

In the year to 31 December 20X0 these transactions occurred:

Discounts allowed $3,000

Discounts received $1,500
Cash paid to suppliers $30,000
Purchases from suppliers $40,000
Contras with receivables ledger $1,000

What was the balance on the payables ledger control account at 31 December 20X0?

A $16,000

B $17,500

C $18,500

D $20,500
18 In the year to 31 October 20X0 Vlad's sales were $142,200, all of which were made at a mark-up of
20%. His opening inventory value was $5,400 and his closing inventory value was $3,600.

What was the value of Vlad's purchases in the year to 31 October 20X0?

$
19 At 1 April 20X9, the payables ledger control account showed a balance of $12,320:

At the end of April the following totals are extracted from the day books for April:

$
Purchases day book 21,000
Returns inwards day book 4,650
Returns outwards day book 7,490
Payments to payables, after deducting $1,430 cash discount 19,630

It is also discovered that the purchase day book figure is net of sales tax at 17.5%; the other
figures all include sales tax.

What is the correct value for the payables creditor to be reported on statement of financial
position at 30 April 20X9?

A $6,845

B $7,898

C $8,445

D $9,875
 Purchases, inventory and cost of sales

20 At 30 September 20X3 Pamela's inventory was valued at $6,400 and her trial balance included the
following balances:

Debit Credit
$ $
Sales 45,000
Purchases 29,500
Inventory at 1 October 20X2 5,700
Carriage inwards 750
Postage 340
Wages 6,000
Advertising 1,900
Other expenses 2,500

What is Pamela's gross profit for the year to 30 September 20X3?

A $4,710

B $15,110

C $15,450

D $16,200

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

21 Jas had the following figures in her accounts at the year-end:

Sales $64,200
Purchases $27,500
Opening inventory $4,700
Closing inventory $6,800
Carriage outwards $750
Carriage inwards $980

What was Jas' gross profit for the year?

A $37,820

B $38,050

C $38,800

D $39,780

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

22 The inventory value for the financial statements of Global Inc for the year ended 30 June 20X3 was
based on an inventory count on 7 July 20X3, which gave a total inventory value of $950,000.

Between 30 June and 7 July 20X3, the following transactions took place:

Purchase of goods $11,750

Sale of goods (mark-up on cost of 15%) $14,950
Goods returned by Global Inc to supplier $1,500

What figure should be included in the financial statements for inventories at 30 June 20X3?

A $952,750

B $949,750

C $926,750

D $958,950

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

23 In the year to 30 November 20X7, Grace Smith obtained a 25% mark up on all her sales.

Her sales for the year totalled $120,600. Her opening inventory was valued at $9,340 and her closing
inventory was valued at $11,855.

What was the value of Grace's purchases for the year to 30 November 2DX7?

A $87,935

B $92,965

C $93,965

D $98,995

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

24 Hema opened a hair salon last year. She sells haircare products such as shampoo, conditioner and
styling products as well as cutting and styling people's hair. She buys haircare products from the
wholesaler and sells them at a mark up of 25%. In the first year of trading, she bought haircare
products for $2,100. Her sales in the year were $2,335.

What is the value of Hema's closing inventory of haircare products?

A $232

B $235

C $349

D $525

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

25 Harminder's shoe business had opening inventory of $2,050 at 1January 20X5. His closing inventory
at 31 December 20X5 was valued at $1,570. Sales for the year totalled $25.730. Harminder makes a
mark-up of 25% on cost of all shoes he sells.

What was the cost of Harminder's purchases during the year?

A $13,672

B $19,624

C $20,104

D $25,250

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

26 A business has opening inventory $30,000, achieves a mark-up of 25% on sales, sales totalled
$1,000,000, purchases were $840,000. Calculate closing inventory.

A $30,000

B $40,000

C $120,000

D $70,000

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

27 Jaya started trading a year ago, selling knitwear she makes with her team of three other knitters. She
sells her sweaters at a mark-up of 35%. In the first year of trading, she bought wool for her sweaters
costing $4,875. Jumper sales in the year were $5,670.

What was the value of Jaya's closing inventory of wool for sweaters?

A $675

B $795

C $911

D $1,190

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

28 Steve's furniture business has cash of $3,575, trade receivables of $2,750, inventory worth $21,870
and a bank loan of $5,600. He rents his showroom from the owner of the premises for $12,000 a
quarter, paid in advance on the 1st of February, May, August and November each year.

What is the capital balance at 31 December 20X1?

A $34,595

B $25,595

C $22,595

D $28,195
29 In the year to 31 May 20X9 Ina's sales were $174,820, and her cost of sales was $139,856. The
value of her opening inventory was $11,844, and the value of her closing inventory was $13,328.

What was the value of her purchases?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

30 In the year to 30 April 20X8, Tanya paid a total of $127,569 to her suppliers.

Her opening and closing balances due to suppliers are her opening and closing inventory values were as
follows:

Opening value ($) Closing value ($)

Suppliers 11,564 12,826
Inventory 5,288 4,184

What was Tanya's cost of sales for the year to 30 April 20X8?

A $126,307

B $129,935

C $129,935

D $125,203

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

31 In the year to 31 May 20X8, Lesley's sales totalled $600,000 and her cost of sales totalled $480,000.

What are the correct figures for Lesley's mark up and margin?

A Mark up: 25%, margin: 25%

B Mark up: 20%, margin: 20%

C Mark up: 25%, margin: 20%

D Mark up: 20%, margin: 25%

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

32 Milos obtains a 25% mark-up on all of the goods he sells. In the year to 31 May 20X1, the goods
which he bought for resale cost him $25,652. His opening inventory was valued at $3,720 and his
closing inventory was valued at $3,640.

What was the value of his sales for the year to 31 May 20X1?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

33 Freddie has not kept full accounting records during the current financial year. He had opening
inventory of $15,000 and purchased goods for resale costing $82,000 during the year. At the year
end he had $12,000 of these goods left in inventory.

Goods are sold at a mark-up on cost of 25%.

What is Freddie's sales revenue for the financial year?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

34 In the year to 30 April 20X6, Peter's sales were $182,000. All of his sales were made at a mark up of
30%. His opening inventory value was $11,800 and his closing inventory value was $9,700.

What was the value of Peter's purchases in the year to 30 April 20X6?

A $125,300

B $137,900

C $140,000

D $142,100

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

35 Amrita has not kept accurate accounting records for her first year of trading. During the year she
purchased $150,000 of inventory and has $35,000 remaining at the end of the year.

All sales are made at a mark-up on cost of 20%.

What is the gross profit for the year?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

36 Maggie does not keep full accounting records for her business, but she does have the following
information relating to the past year:

$
Opening inventory 34,000
Closing inventory 48,000
Purchases 182,000

Standard gross profit percentage on sales revenue is 30%.

What is Maggie's sales figure for the year?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

37 Carmela purchased goods for resale in March of $86,000. All sales are at a gross margin of 20%.
Carmela had opening inventory of $22,000 and closing inventory of $16,000.

What should Carmela's revenue be for March?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

38 A business has compiled the following information for the year ended 31 October 20X2:

$
Opening inventory 9,340
Closing inventory 11,855
Sales 120,600

The gross profit as a percentage of sales is always 25%.

What was the value of purchases for the year to 31 October 20X7?

A $87,935

B $92,965

C $93,965

D $98,995

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

39 During the year to 30 November 20X5, Amanda bought goods for resale at a cost of $75,550. Her
inventory at 1 December 20X4 was valued at $15,740. She did not count her inventory at 30
November 20X5, but she knows that her sales for the year to 30 November 20X5 were $91,800. All
sales were made at a mark up of 20%.

Based on the information above, what was the value of Amanda's inventory at 30 November
20X5?

A $13,630

B $14,790

C $16,690

D $17,850

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

40 Jane sells baby clothes and accessories in her designer boutique. At 31 December 20X5, she had
inventory of 15 baby sleeping bags left, valued at $25 each (their cost price). During the year ended
31 December 20X6, she purchased a further 75 baby sleeping bags at $25 each, and she sold a total
of 65 sleeping bags, making sales of $2,275. There were 25 sleeping bags left in inventory at the
year-end, each valued at their cost price of $25.

What was Jane's gross profit for the baby sleeping bags?

A $150

B $650

C $1,400

D $1,275

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

41 Colin has not kept accounting records for his first year of trading. He has purchased $65,000 of goods
during the year and has $5,000 of goods left in inventory at the end of the year. All sales are made at
a mark-up on cost of 40%.

What is Colin's gross profit for his first year of trading?

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

42 Albert obtained a 30% mark up on all his sales. In the year to 31 March 20X0 he bought goods with a
total value of $182,000. His closing inventory cost $2,100 less than his opening inventory.

What are the value of Albert’s sales revenue in the year to 31 March 20X0?

A $239,330

B $237,900

C $240,000

D $242,100

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

43 Lennox, a sole trader, has calculated that his cost of sales for the year is $144,000. His sales figure
for the year includes an amount of $2,016 being the amount paid by Lennox himself into the business
bank account for goods withdrawn for private use. The figure of $2,016 was calculated by adding a
mark-up of 12% to the cost of the goods. His gross profit percentage on all other goods sold was 20%
of sales.

What is the total figure of sales for the year?

A $172,656

B $177,750

C $179,766

D $180,000
44 A sweet shop makes purchases of $10,124 and sales of $13,260. The proprietor’s children take
goods costing $243 without paying for them. Closing inventory was valued at its cost of $1,120 and
the gross profit margin achieved was a constant 30% on sales.

What is the cost of the opening inventory?

A $278

B $1,439

C $521

D $1,196

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

45 Bill obtains a 25% margin on all his sales. In the year to 31 March 20X0 he bought goods with a total
value of $69,000. His closing inventory cost $3,000 less than his opening inventory.

What is the value of Bill's sales in the year to 31 March 20X0? $

$ %
Sales
Cost of sales
Gross profit

Cost of sales = Opening inventories + Purchases – Closing inventories

Cash day books

Cash and bank summaries

It is common for questions on incomplete records to include a summary of the cash and bank
transactions. Such a summary is called a receipts and payments account. Very often there is a figure
missing from the summary. Preparing a ledger account enables the missing figure to be derived.

This can be simplified using the following ledger accounts.

Example 1:
On 1 January Elma Fudd’s bank account is overdrawn by $1,367. Payments in the year totalled
$8,536 and on 31 December the closing balance is $2,227 (positive).

What are total receipts for the year?

Example 2:
On 1 January, Daisey Chain's business had a cash float of $900. During the year cash of $10,000
was banked, $1,000 was paid out as drawings and wages of $2,000 were paid. On 31 December the
float was $1,000.

How much cash was received from customers for the year?
46 In the year to 28 February 20X0 Simone paid $378,942 into her bank account. This included $40,000
of new capital and was after Simone had taken cash drawings of $26,500. The balance represented
cash received from customers.

How much cash did Simone receive from customers?

47 The following information relates to the accounts of Helter Co for the month of April 20X0:
$
Cash at bank on 1 April 20X0 882 Dr
Sales on credit 42,773
Purchases on credit 38,050
Cash at bank at 30 April 20X0 918 Dr

Cash received from credit customers amounted to $28,112 and payments to credit suppliers were
$38,622.

Assuming there were no other cash transactions what were Helter Co's cash sales for April
20X0?

$
48 Iona’s cash takings of $2,468 for 30 November were not banked until 4 December. At 30 November,
her bank balance was an overdraft of $1,573 and she had a balance of $44 in her petty cash box.

What amount should be included in current assets in Iona’s statement of financial position at
30 November?

A $44

B $895

C $939

D $2,512