TO ACCOUNTING Preparation of financial statements from incomplete records ecords are: Key issues to remember when preparing financial statements from incomplete - Calculate net profit using ONLY balances of assets and liabilities at the st and at the end of an accounting period: a. Capital at close less capital at start less capital introduced during the add drawings for the year. (See example below.) Jack, owner of Beanstore Enterprises began his business with $20 000 ca During the year he made an additional investment of $15 000 in cash an withdrew $4 500 for personal use. His closing capital was valued at $32 Jack's profit earned during the period is: Closing capital + drawings - investment - opening capital = net profit $32 000 + $4 500 - $15.000 - $20 000 = $2 400 Use ratios to prepare the statement of comprehensive income (SOCI) an tatement of financial position (SOFP) -Use ratios such as receivables collection period, payables payment stock turnover, current and acid test ratios, fixed asset turnover and Ensure that you are able to convert gross margin to mark up or vice (see formula and example below). Mark up = gross profit cost of sales (goods sold) profitsales Margin gross profit sales = If markup is 30 per cent then Gross profit = sales - cost of sales 30 130 100 = Margin is 30/130 are the receivables control account in order to calculate: credit sales mounts collected from receivables osing balance pening balance