www.arsuriya.
com
ABDUL RAHIM SURIYA
FCA, FCMA
INCOMPLETE RECORDS
Incomplete records problem occur when
i)
full set of accounts are not prepared or
ii)
some records are accidentally lost or destroyed.
Hypothecial examples:
1- The opening Balance Sheet
Example: A business has following assets & liabilities work out Proprietors Capital
Fixed Assets
Bank Balance
Rent Payable
10,000, Accumulated Dep. 2,000, Inventory
2,000, Creditors
5,000, Prepaid Expenses
500
Solution: Proprietors Capital
3,000,
2,500,
10,000
2- Credit Sales and Debtors
Example: Balance Sheet for 30-06-99 shows A/c. Receivable
Rs. 14000
Collection from customers during the year 2000
Rs. 10,000 & as of 30-6-2000
Rs. 25,000
Find out credit Sales in year 2000
Solution: I
Collection
25,000
+ closing Debtors
14,000
- opening Debtors
(10,000)
29,000
Solution: II
The same could be made in a ledger account of Debtors with
Credit Sales being balancing figure
DEBTORS (A/c RECEIVABLE)
Opening
10,000
Credit Sales (balancing
figure)
29,000
Cash received
25,000
Closing balance
14,000
39,000
39,000
3- Purchases and Trade Creditors
Simply see movement in creditors account or consider it as a formula to work out any missing
figure for either Trade Creditors opening or closing balance or Purchases/ Payments during the
year:
Opening balance of creditors
+ Purchases during the year
- Payments
= closing balance of creditors
or Purchases =
xxx
xxx
(x x x)
xxx
Payments to Creditors + closing bal creditors opening bal creditors
4- Trading Account
Any missing of purchases or cost of sale etc can be derived from the knowledge of Trading
A/c. Format is follows:
COGS
Opening Stock
+ Purchases
- Closing Stock
PURCHASES
]
] or
]
Cost of Goods Sold
+ Closing Stock
- Opening Stock
= Cost of Goods Sold
= Purchases
Example:
Stocks as at December 31, 1999
Rs 8400
Stocks as at December 31, 2000
Rs 9350
Sales for the year 2000
Rs 80000
Profit =
33 1/3% of cost
Find out purchases during the year 2000 ?
Solution:
A VIEW OF TRADING A/C
Sales
Cost of Goods Sold:
MATHMATICAL APPROACH
80,000
If Profit is
Then Sales will be
= 33 1/3% of cost
= 133 1/3% of
Since Sales
Cost will be
= 80,000
= 80000
133 1/3 =
Cost
Opening Stock
8400
Purchases
?
Less: Closing Stock (9350)
60000
Cost of Goods Sold
Gross Profit
__________
?
=========
G. Profit = 60000 x 33 1/3% = 20000
Purchases = COGS + Ending Inv-Op.Inv
= 60000 + 9350 8400
= 60950/-
5- Stolen goods or goods destroyed
Determine the cost of an unknown quantity of goods lost
Example:
Opening Inventory 1.1.2000 Rs 7345
Purchases
106420
Sales
154000
Markup (ie gross profit)
40% on cost
Fire in the shop on 30/9/2000, which destroyed most of the stocks except stocks of Rs 350.
Find out how stocks lost in the fire ?
Solution:
MATHMATICAL APPROACH
TRADING A/C
Cost of Goods Sold= Sales Gross Profit
7345
X
=
154000 - .40 x X
106420
X + .4X
=
154000
Opening Inventory
Purchases
Less: Closing Inventory
(350)
1.4X
113415 X
110000
154000
Cost of Goods Sold + Lost
=
154000 = 110000 = COGS Less: COGS
1.4
Cost of Goods Lost
3415
Note:
=
If the stock was Insured then the Company will lodge claim and will prepare following entry
Insurance (Company) Receivable
DR
3415
Stocks
CR
3415
6- Information through Cash Book
Example:
January 01, 2000 Cash 300, bank 3000, Debtors 2000
During the year 2000 Total Deposited money in bank 95000
Drawing 1200, Misc. expenses 800
On 30-8-2000 a thief brake into the shop & stole 400
December 31, 2000 cash 150, Bank 2500, Debtors 350
Find out sales in year 2000?
Solution: 1) credit sales
closing debtors + collection opening debtors
3500
95000
- 2000
96500
DEBTORS A/C
Opening
Sales (balancing figure)
2000
96500
Collection
Closing
95000
3500
98500
2)
3)
Cash Sales
98500
cash consumed + closing balance - opening balance
800 + 1200 + 400 + 150 - 300
2250
Total Sale (1) + (2) = 98,750
7- ACCRUALS
Example: January 1, 2000 Accrued telephone expenses
850
Paid telephone bills in year 2000
6720
December 31, 2000 Accrued telephone expenses
1140
Find out Telephone Expenses for the year 2000?
Solution:
Telephone bills paid
6720
Less: Already accrued &
Charged L/Y
(850)
Add: Accrued this year
1140
Telephone Expenses for the year
7010
