Incomplete Records
Aim: To show how an accountant can prepare the Final Accounts of a Sole Trader
from minimal unfinished information
There are three main forms of Incomplete Records Questions:
1. Cash Book Method: here you have some starting information, some payments and
receipts made, usually a loan to handle, and some of the information from the closing
Balance Sheet. The secret to doing the question in the time available is to lay out the
question in blank form and fill in the information/figures as they are found.
You start by doing 6 roughwork T accounts
 Opening Balance Sheet to calculate Goodwill (the value put on the reputation
of the firm, ie the difference between what the firm is worth and what was
actually paid for it)
1. Cash Account to find Cash Sales (since we spent lots of cash, it must have
come from Cash Sales)
2. Bank Account to find the Closing figure for Bank to go into the Balance Sheet
3. Debtors Control Account to find Credit Sales (now you have total Sales for the
Trading Account)
4. Creditors Control Account to find Credit Purchases (which helps find total
Purchases for the Trading Account)
5. The total of Drawings (stuff taken from the business for the owners use)
The tricky issues are:
 The loan when set up is interest separate from the loan. The interest is
paid by standing order each month. Repaying the principal is provided
for by opening an Investment Account (Fixed Asset). Money will be
transferred to it each month and eventually the loan will be repaid
when the Investment Account reaches the value of the loan.
 The Drawings differentiate between the amount used and amount paid
of some of the expenses
 There will be prepaids and dues for the expenses which will have to be
calculated
 A bank receipt of Dividends is actually a Capital Injection, ie more
money invested by the owner in the firm
2. Balance Sheet Method: quite similar to the Cash Book Method but the way we
complete the question is different. The initial roughwork is
 The Opening Balance Sheet
 A list of Drawings
Again we lay out the documents blank and focus on completing the Balance Sheet
first. We can calculate Net Assets and the Reserves is a missing figure to make the
Balance Sheet balance. Working backwards we can find Net Profit. Then we add on
the Expenses to find Gross Profit. Using the Gross Mark Up, we can find Cost of
Sales and Sales.
3. Ratios Method: we are given some figures for the final accounts with some ratios.
We put the figures into the blank documents and use the ratios to find the Working
Capital first, followed by Net Assets. We then find reserves and work back to find
Sales.