Incomplete records

Examiners like questions on incomplete records because they provide the opportunity to test a variety of bookkeeping and accounting techniques.

The two main instances in which incomplete records can be found are where:

  • there are no records at all
  • some records exist and information is available to calculate missing figures.

No records at all
It is still possible to calculate a profit or loss figure by using the fact that the profit of a business must be represented by more assets. We list and value the opening and closing net assets, then calculate the profit as the difference between the two:
Profit = Closing net assets - Opening net assets

Allowance must be made for proprietor's drawings and extra capital introduced, so the formula becomes:
Profit = Closing net assets - Opening net assets + Drawings - Capital introduced

Incomplete records
This a more common scenario, both in exam questions and in practice. There are standard techniques for calculating missing figures:

  • Opening capital
  • Missing figures for sales and purchases
  • Missing figures for cash.

Opening capital
We need to have the opening capital of the business at the beginning of a period to provide a starting point - the capital in the balance sheet account. Questions will usually give us a list of opening assets and liabilities, and we use this to arrive at the opening capital.

Missing figures for sales and purchases
If we know the opening and closing receivables/debtors of a business, and the cash received from customers, we can calculate sales. All we need to do is set up a sales ledger total account (see Figure 1).

Figure 1: Sales ledger total account (figures invented)

 $ $
Opening receivables/debtors38,600Cash received218,650
Sales (balancing figures)221,250Closing receivables/debtors41,200
 259,850 259,850

If any three of these figures is known, the fourth can be calculated.

All we are doing here is using the sales ledger control account format, but instead of proving the accuracy of the sales ledger, we are calculating what the sales must have been in order for the other figures to be what they are. The same technique may be used to calculate credit purchases. If the sales figure is given we can calculate the cash received.

There is another way to calculate sales, purchases or stock figures, and that is to use the trading account format. We normally set up the trading account as (figures invented):

Sales  100,000
Less:cost of sales10,000 
 opening inventory/stock78,000 
 less: closing inventory/stock13,00075,000
Gross profit  25,000

Suppose the closing inventory/stock has been destroyed by fire, along with all the inventory/stock records. Then we wouldn't have the closing inventory/stock total to include in our trading account. However, we can calculate it if we know the gross profit percentage on sales - or, of course, the mark-up on cost of sales.

In the example above, gross profit is 25% of sales. If we are told this, we can insert the gross profit of $25,000 and so calculate the missing inventory/stock figure as a balancing item. We can also find a missing purchases figure, or even a missing sales figure.

Suppose we are given:

Cost of sales    
 opening inventory/stock10,000 
 less: closing inventory/stock13,00075,000

We are also told that gross profit percentage on sales is 25%. If gross profit is 25% on sales, cost of sales must be 75%. The sales total is therefore:
$75,000 x 100/75 = $100,000.

Whenever the gross profit percentage is given in an incomplete records question, you know that this technique is needed.

Missing figures for cash
We may be given details of cash receipts and payments plus details of opening and closing balances, but with one figure missing, often the proprietor's drawings. We can calculate the missing figure by setting up a cash account to find the balancing item required.

Here are the incomplete records techniques:

ConstructTo calculate
1 Opening assets and liabilitiesOpening balance
2 Sales or purchases ledger total amountsAny missing figure
3 Trading profit (gross profit percentage must be given)Any missing figure
4 Cash accountAny missing figure

There is only one way to develop fluency in incomplete records questions, and that is to practise as many questions as you can. Here are three short exercises:

The net assets of Altese, a trader, at 1 January 2003 amounted to $128,000. During the year to 31 December 2003, Altese introduced a further $50,000 of capital and made drawings of $48,000. At 31 December 2003, Altese's net assets totalled $184,000. Using this information compute Altese's total profit for the year ended 31 December 2003.

Senji does not keep proper accounting records, and it is necessary to calculate her total purchases for the year ended 31 January 2004 from the following information:


Trade payables/creditors  
  31 January 2003 130,400130,400
  31 January 2004 171,250171,250
Payments to suppliers888,400
Cost of goods taken by Senji for her personal use1,000
Refund received from suppliers2,400
Discounts received11,200

Compute the figure for purchases for inclusion in Senji's financial statements.

Aluki fixes prices to make a standard gross profit percentage on sales of 331/3%. The following information is available for the year ended 31 January 2004 to compute her sales total for the year:


  1 February 2003243,000 
  31 January 2004261,700 
Purchases returns41,200 

Calculate the sales figure for the year ended 31 January 2004.
Opening capital128,000 
Capital introduced50,000 
less: drawings48,000 
Closing capital184,000 
Profit is therefore54,000 
2: Purchases total account   
 $ $
Payments888,400Balance brought forward130,400
Discounts received11,200Goods taken by Senji1,000
Balance carried forward171,250Refunds from suppliers2,400
  Purchases (balancing figure)937,050
 1,070,850 1,070,580
Cost of sales$$
  Opening inventory/stock 243,000
  less: returns41,200554,200
  less: closing inventory/stock  261,700
Sales figure is therefore:   
$535,500 x 3/2 803,250

These three examples are quite elementary, but they illustrate techniques that you will find in nearly all incomplete records questions.