15.3 Reconstruction of financial statements
　　Where limited financial information has been kept, it is possible to reconstruct the financial statements in full.
　　The technique:
　　●Use of ledger accounts to find a balancing figure
　　●Use of cost structure (ratios)
　　Using ledger accounts to find missing figures (the balancing figure approach)
　　It is used in Ledger accounts: i.e.
　　- Receivables
　　- Payables
　　- Cash at bank(hand)
　　to find missing figures in the relevant ledger account factors.
　　●Sales(Receivables) ledger control account
　　Example:
　　Suppose that opening receivables for B Rubble’s business are $30,000. There have been total receipts from customers of $55,000 of which $15,000 relates to cash sales and $40,000 relates to receipts from receivables. Discounts allowed in the year totaled $3,000 and closing receivables were $37,000.
　　What are total sales for the year?
　　A.$65,000
　　B.$50,000
　　C.$47,000
　　D.$62,000
　　Solution: is A
　　Sales = Credit sales + Cash sales
　　= 50,000 + 15,000
　　= 65,000
　　●Purchase (payables) ledger control account
　　The opening payables of Dick Dastard-Lee’s business are $15,000. Total payments made to suppliers during the year were $14,000. Discounts received were $500 and closing payables were $13,000.
　　What are total purchases for the year?
　　A.$16,500
　　B.$16,000
　　C.$12,000
　　D.$12,500
　　Solution is D
　　●Cash in hand (bank) account
　　On Jan 1 20x9, Simon’s bank account is overdrawn by $1,367. Payments in the year totaled
　　$8,536 and on 31 December the closing balance is $2,227. What are total receipts for the year?
　　A.12,900
　　B.14,900
　　C.13,100
　　D.12,130
　　00:22:54.
　　Solution is D
　　Using cost structure to find missing figures
　　In some instances insufficient information is given to reconstruct both control accounts in full.
　　Two types of cost structure may be used:
　　●Gross profit margin
　　●Mark-up
　　Gross profit can be expressed as a percentage of either sales or cost of sales:
　　●Gross profit margin = (Gross profit/ sales) * 100%
　　●Mark up = ( Gross profit / COGS) *100%
　　Example 1:
　　Pad has sales of $1,000, Cost of Sales is 800, Gross profit is 200.
　　The gross profit margin is 200/1000 = 20%
　　The mark up is 200/800 = 25%
　　Example 2:
　　Jack Spratt provides the following information about his business:
　　Margin　　　　　　　　　　　　　　 20%
　　Sales　　　　　　　　　　　　 $100,000
　　Opening inventory　　　　　　　$10,000
　　Purchases　　　　　　　　　　　$82,000
　　Closing inventory after fire　　$3,000
　　What is the cost of inventory lost in the fire?
　　A.$12,000
　　B.$9,000
　　C.$69,000
　　D.$5,667
　　Solution: B
　　(Sales – COGS)/ Sales = 20%
　　(100,000 – COGS)/100,000 = 20%
　　COGS = 80,000
　　Opening Inventory + Purchase – Closing Inventory = COGS
　　10,000 + 82,000 – Closing inventory = 80,000
　　Closing inventory = 12,000
　　12,000-3,000= 9,000