Learning unit 7

Page 1: Learning Unit Overview

• Title: Learning Unit 7: Incomplete Records

Page 2: Importance of Completeness in Records

• Reason for Using Incomplete Records:

  • Often, accounting records are not maintained according to a formal system.

  • A bookkeeper may receive records that are disorganized, leading to business discrepancies.

  • This unit focuses on how to derive meaningful financial statements despite incomplete records.

Page 3: Calculating Net Profit/Loss

• Example 7.1: Pages 213-215 provide methodologies for calculating net profit/loss from incomplete financial data.

Page 4: Practice Opportunity

• Question 7.2: Found on Page 216, provides a chance to apply learning on incomplete records.

Page 5: Statement of Changes in Equity

• Starting Balances and Transactions for the Year:

  • Balance at the Beginning of the Year: R 105,400

  • Additional Capital for the Year: R 0

  • Profit for the Year: R 74,214

  • Drawings: (R 25,420)

  • Balance at Year-End: R 154,194

• Calculation of Owner's Equity at Year End:

  • Assets:

    • Total: R 243,970

  • Liabilities Calculation:

    • Total: R 89,776

  • Owner's Equity: R 243,970 - R 89,776 = R 154,194

Page 6: Statement of Financial Position

• Date: 30 September 20.8

• Assets:

  • Non-current Assets: R 104,532 (Property, Plant & Equipment)

  • Current Assets: R 139,438 (Breakdown includes:

    • Inventories: R 92,008

    • Trade Receivables: R 38,874

    • Cash: R 8,556)

  • Total Assets: R 243,970

• Equity and Liabilities:

  • Owner’s Equity: R 154,194

  • Non-current Liabilities: R 57,040

  • Current Liabilities: R 32,736

  • Total Liabilities: R 89,776

  • Total Equity and Liabilities: R 243,970

Page 7: Calculating Sales and Purchases

• Example 7.2: Pages 219-220 illustrate the process for calculating sales and purchases from incomplete records.

Page 8: Another Practice Opportunity

• Question 7.4: Available on Page 234 encourages reviewing sales and purchase calculations.

Page 9: Statement of Profit or Loss and Other Comprehensive Income

• Date: 28 February 20.5

• Revenue Calculation:

  • Revenue: R 370,425

  • Less Cost of Sales: (R 53,625)

  • Opening Inventory: R 63,225

  • Add Purchases: R 85,575

  • Closing Inventory: (R 95,175)

• Gross Profit: R 316,800

• Other Income: R 4,175 (Breakdown includes profit on furniture sale and interest income)

• Total Income: R 320,975

• Expenses Total: (R 172,455)

• Profit Before Finance Cost: R 148,520

• Interest Expense: (R 6,750)

• Final Profit/Comprehensive Income: R 141,770

Page 10: Debtors Control

• Debtors Control Details:

  • Opening Balance: R 53,700

  • Sales: R 370,425

  • Closing Balance: R 69,000

  • Totals: R 424,125

• Creditors Control Details:

  • Opening Balance: R 65,685

  • Purchases: R 85,575

  • Closing Balance: R 151,875

Page 11: Next Year’s Equity Changes

• Statement of Changes in Equity:

  • Beginning of the Year Balance: R 122,775

  • Profit for the Year: R 141,770

  • Drawings: (R 18,750)

  • Year-End Balance: R 245,795

Page 12: Financial Position Summary

• Date: 28 February 20.5

• Total Assets: R 358,430

• Breakdown of Assets:

  • Non-current Assets: R 109,950

  • Current Assets: R 248,480

• Equity and Liabilities:

  • Total Owner’s Equity: R 245,795

  • Non-current liabilities: R 45,000

  • Current liabilities: R 67,635

• Total Liabilities: R 358,430