Professional Documents
Culture Documents
Activity 1
The opening capital of Edna Clouds at 1 Jan 2005 was
£2,000. At 31 December 2005 the capital figure was
£8,500.
How much profit has been earned during the year?
Opening capital 2,000
Profit (must be) 6,500
Closing capital 8,500
We can calculate profit when we have details of
the opening and closing capital and have details
of capital introduced and withdrawn during the
year.
Activity 2
The opening capital of Ivy Cladwall at 1 Jan 2005
was £16,000. On 1 July 2005 she introduced
further capital of £4,000 and during the year
withdrew a total of £8,000. At 31 December
2005 the capital figure was £30,000.
How much profit has been earned during the
year?
Opening capital 16,000
Capital introduced 4,000
Withdrawals - 8,000
12,000
Profit (must be) 18,000
362000 362000
PROFIT OR LOSS WHEN
THE NET ASSETS AT THE
BEGINNING AND END OF
THE YEAR ARE KNOWN.
Activity 4
What do we mean by net assets?
FIXED ASSETS + CURRENT ASSETS – LT LIABILITIES – CURRENT
LIABILITIES
Receivables 1,040,000
Inventory 6,000,000
Accounts payable were 1,400,000 and had borrowed Ug.shs.
10,000,000 from a friend. Interest accrued on the loan amount to
Ug.shs. 200,000. AFRICELL UGANDA 2015estimated that he was
withdrawing Ug.shs. 300,000 per month from the business.
Required
Determine the net profit for the two years valuing the non-
current assets at cost less depreciation as given below;
Premises at 2% p.a, Fittings at 5% p.a and on motor vehicle at
20% p.a.
Guidelines for preparation of
financial statements from incomplete
records
In order to prepare financial statements from incomplete
records, the following guidelines will assist you to
appreciate how to determine the missing information. But
when applying these guidelines, it should be noted that
the level of incompleteness might differ from one
organization to another and the guidelines should be
oriented to suite a specific situation. That is, the approach
to be adopted is not fully dependent on the guidelines but
rather dictated by the available or missing data.
1. Draw up a statement of financial position to
determine the opening capital. The statement of
financial position is a balance sheet that takes into
account the assets and liabilities at start of the
accounting period.
Illustration
Brian had the following Assets and Liabilities on 1st
January 2009
Premises 30,000
Machinery 120,000
Inventory 80,000
Receivables 65,000
Payables 50,000
Prepayments 9,000
Accrued Expenses 6,000
Cash at Bank 120,000
Cash at Hand 45,000
Motor Vehicles 140,000
Bills Payable 56,000
Furniture 70,000
Required
Compute Brian’s capital as at 1st January 2009
Illustration3
Given the following information, determine the credit
sales
Alternatively
Gross profit = Sales – Cost of sales
Given that margin = profit as a percentage of sales
Alternatively
If the margin = X%
Then X% Sales = Sales – Cost of sales
Sales – X% Sales = Cost of Sales
(1-X %) Sales = Cost of Sales
Sales = Cost of sales
1–X%