SINGLE ENTRY CALCULATION OF MISSING INFORMATION

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Advance Financial Accounting (FIN-611)

LESSON # 4

SINGLE ENTRY

CALCULATION OF MISSING INFORMATION

As we have already learned that a medium sized entity will not be preparing its books

of accounts based on double entry book keeping system rather it will be maintaining

following set of records in order to prepare its financial statements:

Cash Book

i. Cash Account

ii. Bank Account

Debtors (Accounts Receivables) Ledger

Creditors (Accounts Payables) Ledger

Statement of Affairs (Opening)

Year-end adjustments

i. Closing stock

ii. Depreciation of fixed assets

iii. Provision for doubtful debts

iv. Accruals and prepayments

v. Disposal of Assets

Above information provides sufficient data which is required to prepare Income

Statement and Balance Sheet of the entity.

For students the question becomes more complex when the above set of records is not

completely prepared and some information is missing from these records. In this case

the students have to put expertise in searching out the missing information firstly and

then to prepare financial statements.

Possible missing information and the procedure to ascertain that information is being

discussed hereunder:

Sales

Sales may be of two types (i) Credit Sales, and (ii) Cash Sales. Credit Sales will be

ascertained by preparing Debtors Account while Cash Sales will be found out from the

Cash Book.

Question:

From the following information, find out the credit sales:

Rupees

Opening balance of Debtors

12,000

Returns Inward

5,000

Cash received from debtors

45,000

Discount allowed

3,000

Bad Debts

1,500

Closing balance of Debtors

10,000

Question:

From the following cash transactions ascertain the amount of cash sales:

Rupees

Opening Cash balance

5,000

Opening Bank balance

10,000

Advance Financial Accounting (FIN-611)

Cash collected from Debtors

20,000

Commission received

5,000

Payment to Creditors

10,000

Cash purchases

20,000

Closing Cash balance

10,000

Closing Bank balance

15,000

Purchases

The purchases may also be of two types (i) Credit Purchases and (ii) Cash Purchases.

Credit Purchases will be ascertained by preparing Creditors Account while Cash

Purchases will be appearing in the Cash Book.

Question:

From the following information, find out the Credit purchases:

Rupees

Opening Creditors

7,600

Cash paid to Creditors

20,000

Discount received

500

Returns outward

2,400

Closing Creditors

9,500

Stocks/Inventory

Opening stock appears in the Statement of Affairs and Closing stock is an item given

in the year end adjustments. Some times these information are hidden in this case the

stock balances will be ascertained through the equation of cost of goods sold i.e.

Opening Stock + Purchases Closing Stock = Cost of Goods Sold

Question:

From the following information, calculate opening stock:

Rupees

Purchases

20,000

Sales

30,000

Closing Stocks

10,000

Gross profit

20% of Sales

Drawings

Some times cash drawings are missing, this information appears in payments side of

the cash book. Cash book is prepared to ascertain drawings as a balancing figure in the

credit side.

Information in Cash Book

Receipts

Rupees

Payments

Rupees

Opening Balance b/f

Cash purchases

Cash Sales

Paid to creditors

Received from debtors

Operating expenses

Other incomes

Purchase of assets

Fresh capital

Repayment of loan

Advance Financial Accounting (FIN-611)

Loan taken

Drawings

Sales proceeds of assets

Investments

Fixed deposits

Closing balance c/f

Information in Debtors Account

Debit

Rupees

Credit

Rupees

Opening Balance b/f

Cash received from debtors

Credit Sales

Cheques received form

debtors

Discount Allowed

Bad Debts

Sales returns

Closing Balance c/f

Information in Creditors Account

Debit

Rupees

Credit

Rupees

Cash paid to creditors

Opening Balance b/f

Cheques paid to

Credit Purchases

creditors

Discount Received

Purchase returns

Closing Balance c/f

Information in Statement of Affairs (Opening)

Rs.

All Assets

Fixed Assets

***

Investments

***

Current Assets

***

Less

All Liabilities

Loans

***

Current Liabilities

***

Owner's Equity.

***

Practice Questions

Q.1

Ehsan ul Haq has kept records of his business transactions in a single entry form, but

he did not realize that he had to record cash drawings. His bank account for the year

20×8 is as follows:

Advance Financial Accounting (FIN-611)

Balance 1.1.2008

1,890

Cash withdrawn from bank

5,400

Receipts from debtors

44,656

Trade Creditors

31,695

Loan from T Hughes

2,000

Rent

2,750

Rates

1,316

Drawings

3,095

Sundry Expenses

1,642

Balance 31.12.2008

2,648

48,546

Records of cash paid were: Sundry expenses Rs. 122; Trade creditors Rs. 642. Cash

sales amounted to Rs. 698. The following information is also available:

Cash in Hand

Trade Creditors

Debtors

4,896

5,091

Rent Owing

6,013

7,132

Rates in Advance

250

Van (at valuation)

282

312

Stock

2,800

2,400

11,163

13,021

You are to draw up a trading and profit and loss account for the year ended 31

December 20×8 and a balance sheet as at that date. Show all of your workings.

Q2.

Following is the position of assets and liabilities of MR. A who keeps his book by

single entry system:

January 01

December 31

2006

Debtors

5,300

8,800

Creditors

1,500

1,950

Stock

1,700

1,900

Fixed assets

2,140

1,740

Following are other details:

Rs.

Total sales (including cash sales Rs. 500)

10,000

Total purchases (including cash purchases Rs.

4,500

2,050)

1,000

General expenses of business

Drawings

300

Cash in hand and at bank

410

Payment for fixed assets

500

Advance Financial Accounting (FIN-611)

Stock of Rs. 500 was used by the proprietor for his personal use and material of Rs. 50

was used for constructing a part of plant. A how interest on capital at 5% p.a.

You are required to prepare:

a. Trading and profit and loss account for the year ending December 31, 2006, and

b. Balance sheet as on December 31, 2006.

Answers

(Capital in the beginning Rs. 7,000, Gross Profit Rs. 6,250, Net Profit Rs. 3,930,

Balance Sheet total Rs. 12,850).

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