Level: Intermediate
Intermediate Worked Examples: Incomplete Records
Six graded examples on using the Comparison and Analysis Methods to find profit or loss from incomplete records, with capital statements, control accounts and financial statements.
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Example 1: Statement to Calculate Opening Capital
Question
Solution plan
Use the Comparison Method. Opening Capital = Total Assets - Total Liabilities. Classify each item into assets (premises, fittings, inventory, receivables, cash, bank) and liabilities (payables, loan). Total each group, then subtract total liabilities from total assets.
| Particulars | RM | RM |
|---|---|---|
| Assets | ||
| Premises | 80,000 | |
| Shop fittings | 12,000 | |
| Inventory | 8,000 | |
| Trade receivables | 5,000 | |
| Cash | 3,000 | |
| Bank balance | 10,000 | |
| Total Assets | 118,000 | |
| Liabilities | ||
| Trade payables | 6,000 | |
| Bank loan | 20,000 | |
| Total Liabilities | 26,000 | |
| Opening Capital | 92,000 |
Opening Capital = RM118,000 - RM26,000 = RM92,000.
Answer
Total assets are RM118,000 and total liabilities are RM26,000. The Opening Capital of Kedai Runcit Sri Maju as at 1 January 2023 is RM92,000.
Where marks are usually lost
Example 2: Calculating Profit by Comparing Capital
Question
Solution plan
Step 1: Closing Capital = Total closing Assets - Total closing Liabilities. Step 2: Net Profit = Closing Capital + Drawings - Additional Capital - Opening Capital. Drawings are added back because they reduce capital even though they are not an expense; additional capital is deducted because it raises capital but is not profit.
| Particulars | RM | RM |
|---|---|---|
| Assets | ||
| Workshop equipment | 30,000 | |
| Spare-part inventory | 15,000 | |
| Trade receivables | 8,000 | |
| Bank balance | 20,000 | |
| Total Assets | 73,000 | |
| Liabilities | ||
| Trade payables | 5,000 | |
| Total Liabilities | 5,000 | |
| Closing Capital | 68,000 |
| Particulars | RM |
|---|---|
| Closing Capital | 68,000 |
| Add: Drawings | 12,000 |
| 80,000 | |
| Less: Additional Capital | 5,000 |
| 75,000 | |
| Less: Opening Capital | 50,000 |
| Net Profit | 25,000 |
Net Profit = RM68,000 + RM12,000 - RM5,000 - RM50,000 = RM25,000.
Answer
The closing capital on 31 December 2023 is RM68,000. After adding drawings of RM12,000 and deducting additional capital of RM5,000 and opening capital of RM50,000, the net profit for the year is RM25,000.
Where marks are usually lost
Example 3: Full Comparison Method with Statement of Financial Position
Question
Solution plan
Prepare a Statement to Calculate Opening Capital (opening assets - opening liabilities) and a Statement to Calculate Closing Capital (closing assets - closing liabilities). Then Profit = Closing Capital + Drawings - Additional Capital - Opening Capital. Finally, the Statement of Financial Position classifies assets into non-current/current and shows owner's equity (closing capital) plus non-current/current liabilities; total assets must equal total equity and liabilities.
| Particulars | RM | RM |
|---|---|---|
| Assets | ||
| Fittings | 20,000 | |
| Inventory | 6,000 | |
| Receivables | 4,000 | |
| Bank balance | 8,000 | |
| Cash | 2,000 | |
| Total Assets | 40,000 | |
| Liabilities | ||
| Payables | 3,000 | |
| Total Liabilities | 3,000 | |
| Opening Capital | 37,000 |
| Particulars | RM | RM |
|---|---|---|
| Assets | ||
| Fittings | 18,000 | |
| Inventory | 9,000 | |
| Receivables | 6,000 | |
| Bank balance | 14,000 | |
| Cash | 3,000 | |
| Total Assets | 50,000 | |
| Liabilities | ||
| Payables | 4,000 | |
| Bank loan | 5,000 | |
| Total Liabilities | 9,000 | |
| Closing Capital | 41,000 |
| Particulars | RM |
|---|---|
| Closing Capital | 41,000 |
| Add: Drawings | 8,000 |
| 49,000 | |
| Less: Additional Capital | 6,000 |
| 43,000 | |
| Less: Opening Capital | 37,000 |
| Net Profit | 6,000 |
| Particulars | RM | RM |
|---|---|---|
| Non-Current Assets | ||
| Fittings | 18,000 | |
| Current Assets | ||
| Inventory | 9,000 | |
| Receivables | 6,000 | |
| Bank balance | 14,000 | |
| Cash | 3,000 | |
| 32,000 | ||
| Total Assets | 50,000 | |
| Owner's Equity | ||
| Closing Capital | 41,000 | |
| Non-Current Liabilities | ||
| Bank loan | 5,000 | |
| Current Liabilities | ||
| Payables | 4,000 | |
| Total Equity and Liabilities | 50,000 |
Closing capital RM41,000 = Opening capital RM37,000 + Profit RM6,000 + Additional capital RM6,000 - Drawings RM8,000. Total assets RM50,000 = total equity and liabilities RM50,000.
Answer
Opening capital is RM37,000 and closing capital is RM41,000. Net profit for the year ended 31 December 2023 is RM6,000. The Statement of Financial Position balances at RM50,000 (total assets = total equity and liabilities).
Where marks are usually lost
Example 4: Analysis Method: Estimating Credit Sales
Question
Solution plan
Construct the Receivables Control Account. Debit side: balance b/d (opening receivables) and credit sales (the balancing figure). Credit side: receipts, discount allowed, bad debts, returns inwards, and balance c/d (closing receivables). Credit sales is the figure that balances the account. Total sales = credit sales + cash sales.
| Particulars | RM | Particulars | RM |
|---|---|---|---|
| Balance b/d | 12,000 | Bank and Cash | 80,000 |
| Credit sales | 89,000 | Discount allowed | 2,000 |
| Bad debts | 1,000 | ||
| Returns inwards | 3,000 | ||
| Balance c/d | 15,000 | ||
| 101,000 | 101,000 |
Credit sales = RM101,000 - RM12,000 = RM89,000 (the debit-side balancing figure).
Answer
Credit sales for the year ended 31 December 2023 are RM89,000. Total sales = credit sales RM89,000 + cash sales RM10,000 = RM99,000.
Where marks are usually lost
Example 5: Analysis Method: Estimating Credit Purchases
Question
Solution plan
Construct the Payables Control Account. Credit side: balance b/d (opening payables) and credit purchases (the balancing figure). Debit side: payments to payables, discount received, returns outwards, and balance c/d (closing payables). Credit purchases is the figure that balances the account on the credit side.
| Particulars | RM | Particulars | RM |
|---|---|---|---|
| Bank and Cash | 60,000 | Balance b/d | 8,000 |
| Discount received | 1,500 | Credit purchases | 66,500 |
| Returns outwards | 2,000 | ||
| Balance c/d | 11,000 | ||
| 74,500 | 74,500 |
Credit purchases = RM74,500 - RM8,000 = RM66,500 (the credit-side balancing figure).
Answer
Credit purchases of Restoran Selera Kampung for the year ended 31 December 2023 are RM66,500.
Where marks are usually lost
Example 6: Full Analysis Method with Adjustments: Income Statement
Question
Solution plan
Step 1: Use the Receivables Control Account to estimate credit sales (closing receivables + receipts - opening receivables). Step 2: Use the Payables Control Account to estimate credit purchases (closing payables + payments - opening payables). Step 3: Sales = credit + cash; Purchases = credit + cash. Step 4 (adjustments): accrued rent is added to rent expense; commission received in advance is deducted from commission revenue. Step 5: Prepare the Income Statement: Gross Profit = Sales - Cost of Sales (opening inventory + purchases - closing inventory); Net Profit = Gross Profit + revenue - expenses.
| Particulars | RM | Particulars | RM |
|---|---|---|---|
| Balance b/d | 10,000 | Bank and Cash | 95,000 |
| Credit sales | 98,000 | Balance c/d | 13,000 |
| 108,000 | 108,000 |
Credit sales = RM108,000 - RM10,000 = RM98,000.
| Particulars | RM | Particulars | RM |
|---|---|---|---|
| Bank and Cash | 70,000 | Balance b/d | 7,000 |
| Balance c/d | 9,000 | Credit purchases | 72,000 |
| 79,000 | 79,000 |
Credit purchases = RM79,000 - RM7,000 = RM72,000.
| Particulars | RM | RM |
|---|---|---|
| Sales (98,000 + 15,000) | 113,000 | |
| Less: Cost of Sales | ||
| Opening inventory | 8,000 | |
| Purchases (72,000 + 5,000) | 77,000 | |
| 85,000 | ||
| Less: Closing inventory | 11,000 | |
| Cost of Sales | 74,000 | |
| Gross Profit | 39,000 | |
| Add: Commission received (4,000 - 800) | 3,200 | |
| 42,200 | ||
| Less: Expenses | ||
| Rent (6,000 + 500) | 6,500 | |
| Rates | 3,000 | |
| Salaries | 12,000 | |
| Total Expenses | 21,500 | |
| Net Profit | 20,700 |
Rent adjusted: RM6,000 paid + RM500 accrued = RM6,500. Commission adjusted: RM4,000 - RM800 received in advance = RM3,200.
Answer
Credit sales are RM98,000 and credit purchases are RM72,000. Total sales RM113,000 and cost of sales RM74,000 give a gross profit of RM39,000. After adding adjusted commission of RM3,200 and deducting adjusted expenses of RM21,500, the net profit for the year ended 31 December 2023 is RM20,700.
Where marks are usually lost
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