Sole Traders are often ignorant to the accounting procedures necessary for the preparation of a complete set of financial accounts. In many instances these Sole Traders are required to produce an income statement and a statement of financial position at the end of the trading period.
Required:
A. Describe TWO (2) situations in which a sole trader may have incomplete records of accounting transactions.
B. Use examples to illustrate THREE (3) techniques that can be used to construct relevant financial data from a set of incomplete record.
C. Lyn Mack is a hair dresser who is able to provide the following figures from a diary for the year ended December 31, 2018:
Supplies at the end of the year $40,000
Hair Dryers $38,000
Owing to suppliers $10,000
Loan from BNS $35,000
Furniture $90,000
Owings by customers $25,000
Required:
Use the information above to construct Lyn Mack’s Statement of Affairs and ascertain the opening capital.
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