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Question 2 Outline the situations where incomplete record techniques will be required to produce a set...

Question 2

Outline the situations where incomplete record techniques will be required to produce a set of financial statements.

3 Marks

On 1 January 2016, P. Jones a sole trader owned a business, that had the following assets and liabilities:

Motor vehicles 124,125

Accumulated depreciation on motor vehicles 21,030

Premises 450,000

Receivables 119,250

Allowances for receivables 2,100

Payables 96,000

Accruals 9,750 Inventory 33,400 Prepayments 780

Bank overdraft 11,415 Cash on hand 110

Term loan 210,000

You are required to:

Calculate the proprietor’s capital as at 1 January 2016.

7 Marks

In brief, outline your understanding of why the incomplete record technique used in part

(i) will give the proprietors opening capital.

2 Marks

c) Despite being advised on the importance of maintaining proper books and records P. Jones failed to do so in the year to 31 December 2016. He is able to provide you with the following information:

Opening receivables debit balance 119,250

Closing receivables debit balance 224,320

Closing receivables credit balance 1,560

Amounts received from customers 754,100

Discounts allowed to customers 12,450

Irrecoverable debts written off 2,970

Interest charged to receivables for slow payment 4,110

Based upon the information provided, you are required to calculate P. Jones’s credit sales for the year to 31 December 2016. P. Jones is able to tell you that all goods are sold on credit.

8 Marks Total 20 Marks

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Expert Solution

ekkarill92 answered 1 year ago

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