Single Entry and Incomplete Records

SINGLE ENTRY AND INCOMPLETE

RECORDS

C MBAHIJONA

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 1

LEARNING OUTCOME
• Deduce the figure of profits where only the increase

in capital and details of drawings are known;
• Draw up an income statement and balance sheet
from records not kept on a double entry system;
• Deduce the figures of sales and purchases from
incomplete records.

WHY DOUBLE ENTRY IS NOT USED
• For every small shopkeeper, market stall or other

small business to keep its books using a full double
entry system would be ridiculous. Large number of
the owners of such business would not know how to
write up double entry records, even if they wanted to.
• It is more likely that they would enter details of a
transaction once only, using a single entry system.
Also, many of them would fail to record every
transaction, resulting in incomplete records.

WHY DOUBLE ENTRY IS NOT USED
• Many small firms, especially retail shops, can have

all the information they want by keeping a cashbook
and having some form of record, not necessarily in
double entry form, of their debtors and creditors.
• Somehow profits will have to be calculated. This
could be for the purpose of calculating income tax
payable.

PROFIT AS AN INCREASE IN CAPITAL
• The way to start is to recall that, unless there has

been an introduction of extra cash or resources into
the firm, the only way that capital can be increased
is by making profits.
• Therefore, profits can be found by comparing capital
at the end of the last period with that at the end of
this period.

PROFIT AS AN INCREASE IN CAPITAL -
EXAMPLE
• Firm capital at the end of 19x4 was N$2 000. During 19x5 there
have been no drawings and no extra capital has been brought in
by the owner. At the end of 19x5 the capital was N$3 000.
• Net profit (?) = 19x5 closing – 19x4 closing
• N$3 000 - N$2 000 = N$1 000
Assume drawings was N$700
19x4 closing + net profit (?) – drawings = 19x5 closing
N$2 000 + ? - N$700 = N$3 000
We can see that N$1 700 profits was the figure needed to
complete the formula

STATEMENT OF AFFAIRS
Statement of affairs is the name given to what would

have been called a balance sheet if it had been drawn
up from a set of records.
H Tshwete has not kept proper bookkeeping records,

but he has kept notes in diary form of the
transactions of his business. Details of the assets
and liabilities at 31 December 19x5 and 31
December 19x6 as follows:
At 31 December 19x5
Assets: N$
Motor van 1 000
Fixtures 700
Inventory 850
Debtors 950
Bank 1 100
Cash 100
Liabilities:
Creditors 200
Short Term Loan from J Ogden 600
Prepare a statement of affairs at 31 December 19x5

At 31 December 19x6
Assets N$
Motor Van (net Depreciation) 800
Fixtures (net Depreciation) 630
Inventory 990
Debtors 1 240
Bank 1 700
Cash 200
Liabilities
Creditors 300
Short Term Loan from J Ogden 400
Drawings 900
Prepare a statement of affairs at 31 December 19x6

DRAWING UP THE FINANCIAL
STATEMENTS
The following details of transactions for J Fakiers
retail store for the year ended 31 December 19x5.
• The sales are mostly on a credit basis. No record of
sales has been made, but N$10 000 has been
received, N$9 500 by cheque and N$500 by cash,
from persons to whom goods have been sold.
• Amount paid by cheque to suppliers during the year
= N$7 200.

STATEMENTS
• Expenses paid during the year: by EFT, rent N$200,
General Expenses N$180, by cash rent N$50.
• J Fakier took N$10 cash per week (for 52 weeks) as
drawings.
• Other information is available:
At 31.12.19x4 At 31.12.19x5
Debtors 1 100 1 320
Creditors for goods 400 650
STATEMENTS
At 31.12.19x4At 31.12.19x5
Rent owing - 50
Bank balance 1 130 3 050
Cash balance 80 10
Inventory1 590 1 700
The only fixed asset consists of fixtures which were valued at
31.12.19x4 at N$800. These are to be depreciated at 10% p.a.
straight line.
Draw up a statement of affairs as at 31.12.19x4 and prepare
income statement and statement of financial position
31.12.19x5.
INCOMPLETE RECORDS AND MISSING
FIGURES
• In practice, part of the information relating to cash
receipts or payments is often missing. If the missing
information is in respect of one type of payment,
then it is normal to assume that the missing figure
is the amount required to make both totals agree in
the cash column of the cash and bank summary.
• This does not happen with bank items owing to the
fact that another copy of the bank statement can
always be obtained from the bank.

INCOMPLETE RECORDS AND MISSING FIGURES –
EXAMPLE – DRAWINGS FIGURE IS UNKNOWN
Cash (N$) Bank (N$)
Cash paid into the bank
during the year 5 500
Receipts from debtors 7 250 800
Paid to supplies 320 4 930
Drawings for the year ? -
Expenses paid 150 900
Balance 1.1.19x5 35 1 200
Balance 31.12.19x5 50 1 670
Required: find the amount of drawings.
EXAMPLE – CASH RECEIPTS FROM DEBTORS IS
UNKNOWN
Cash (N$) Bank (N$)
Receipts from debtors ? 6 080
Cash withdrawal from bank 920
Paid to supplies - 5 800
Expenses paid 640 230
Drawings for the year 1 180 315
Balance 1.1.19x5 40 1 560
Balance 31.12.19x5 70 375
Required: find the amount of receipts from debtors.
WHERE THERE ARE TWO MISSING PIECES OF
INFORMATION
• If both cash drawings and cash receipts from debtors
were not known, it would not be possible to deduce both
of these figures.
• The only course option would be to estimate whichever
figure was more capable of being accurately assessed,
use this as a known figure, then deduce the other figure.
• This is most unsatisfactory position as both of the figures
are no more than pure estimates, the accuracy of each
one relying entirely upon the accuracy of the other.

CASH SALES AND PURCHASES FOR CASH
• Where there are cash sales as well as sales on credit

terms, then the cash sales must be added to sales
on credit to give the total sales for the year. This
total figure of sales will be the one shown in the
trading account.
• Similarly, purchases for cash will need adding to
credit purchases to give the figure of total
purchases for the trading account.

GOODS STOLEN OR LOST BY FIRE, ETC
• When goods are stolen, destroyed by fire, or lost in

some other way, then the value of them will have to
be calculated.
• If the inventory had been properly valued
immediately before the fire, burglary, etc, then the
inventory loss would obviously be known.
• If a full and detailed system of inventory records
were kept, then the value would also be known.

FIGURES OF PURCHASES AND SALES ARE KNOWN AND
ALL GOODS ARE SOLD AT A UNIFORM PROFIT RATIO
J Collins lost the whole of his inventory by fire on
17.03.19x9. The last time that an inventory had been
counted was on 31.12.19x8, the last balance sheet
date, when it was N$1 950 at cost. Purchases from
then to 17.03.19x9 amounted to N$6 870 and sales
for the period were N$9 600. all sales were made at a
uniform profit margin of 20%.
Required: Prepare a trading account for the period
01.01.19x9 to 17.03.19x9.

FIGURES OF PURCHASES AND SALES ARE UNKNOWN
AND ALL GOODS ARE SOLD AT A UNIFORM PROFIT RATIO
T strydom had the whole of his inventory stolen from his warehouse on the
night of 20.08.19x6. also, destroyed were his sales and purchases journals,
but the debtors and creditors ledgers were salvaged. The following facts are
known.
• Inventory was known at the last balance sheet date, 31.03.19x6 to be N$12
480 at cost.
• Receipts from debtors during the period 01.04.19x6 to 20.08.19x6 amounted
to N$31 745. Debtors were: at 31.03.19x6 N$14 278, at 20.08.19x6 N$12
333.
• Payments to creditors during the period 01.04.19x6 to 20.08.19x6 amounted
to $17 270. creditors were: at 31.03.19x6 N$7 633, at 20.08.19x6 N$6 289.
• The margin on sales has been constant at 25%
Required: Prepare trading account from 01.04.19x6 to 20.08.19x6.

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SINGLE ENTRY AND INCOMPLETE

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 1

• Deduce the figure of profits where only the increase

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 2

• For every small shopkeeper, market stall or other

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 3

• Many small firms, especially retail shops, can have

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 4

• The way to start is to recall that, unless there has

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 5

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 6

Statement of affairs is the name given to what would

H Tshwete has not kept proper bookkeeping records,

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 8

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 9

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 10

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 13

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 16

• Where there are cash sales as well as sales on credit

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 17

• When goods are stolen, destroyed by fire, or lost in

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 18

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 19

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 20

24 August 2022 Fundamentals of Accounting - AFE3582 C Mbahijona 21

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