Chapter 13 Single Entry: Incomplete Records

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Chapter 13Single Entry Incomplete Records
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Introduction

• Incomplete records are normally prepared by
  businesses which lack professional management or
  businesses whose accounting records have been
  destroyed during the period. All the records
  that these businesses may have are

1. Balance of assets and liability accounts at the
   start and end of an accounting period.

1. Information on cash spent and received during an
   accounting period.

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Net profit from assets and liability account
balances
The change in the capital balance of a business
from the start of an accounting period to the
end is due to Additional capital invested by
owner during the period Net profit or loss for
the period and Drawings taken.
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Net profit from assets and liability account
balances
Capital (total assets less liabilities) at start
of period X add Capital introduced during the
period X add Net profit (loss)
X less Drawings (X Capital (total assets
less liabilities) at end of period X
NB Capital at close add drawing less capital at
start less capital introduced Net profit (loss)
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Preparing the Income Statement
The format is the same as in business which use
full double entry. However, instead of using a
Trial Balance, a cash book (amounts received and
spent) and asset and liability balances at the
start and end of an accounting period are used in
single entry businesses
Interpreting the Cash book Item
Side Receipts from sales/income dr Receipts
from loans dr Receipts from debtors
dr Payments for expenses cr Payments for
assets cr Payment to creditors cr
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Preparing the Income Statement
Once opening and closing balances for trade
debtors are given, a debtors/sales ledger control
accounts must be prepared to calculated credit
sales. The value for credit sales must be
added to cash sales if any and used in the Income
Statement. Note that cash sales are not the same
as receipts from debtors.
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Preparing the Income Statement
Sales/debtors ledger control account
Bal b/d (debtors balance at start) x Bal b/d (debtors overpaid at start) x
Credit sales (balancing figure) x Cash/Bank (receipts from customers) x
cash/bank (refunds to customers) x Cash discounts allowed x
NSF/ dishonoured cheques x Bad debts x
    Sales return/return inwards x
    Contra-entry (set off) x
Bal c/d overpayment at close) x Bal c/d (debtors balance at close) x
  x   x
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Preparing the Income Statement
Once opening and closing balances for trade
creditors are given, a creditors/purchases ledger
control accounts must be prepared to calculated
credit purchases. The value for credit
purchases must be added to cash purchase if any
and used in the Income Statement. Note that cash
purchases are not the same as payments to
creditors.
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Preparing the Income Statement
Purchases/creditors ledger control account
Bal b/d (overpayment balance at start) x Bal b/d (suppliers balance at start) x
Cash/Bank (payments to creditors) x Credit purchases (balancing figure) x
Cash discounts received x Cash/bank (refunds from suppliers) x
Returns outwards/purchases returns x    
Contra-entry (set off) x    
Bal c/d (creditors at close) x Bal c/d (overpayment to credit at close) x
  x   x
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Preparing the Income Statement
Depreciation expense, a non cash expense, must be
calculated by subtracting the fixed asset value
at close from the value of the fixed asset at
start. The reduction is depreciation expense.
This must only be done if the rate of
depreciation is not given in a question.
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Preparing the Income Statement
Remember an expense under the accrual basis
represents not the cash paid but the amount that
must be paid for the accounting period. The
account bellows shows how cash expense is to be
adjusted if there are amount prepaid or owing.

Prepaid b/d (start) x Owing b/d (start) x
Cash/bank (expense paid) x PL (balancing figure) x
Owing c/d (close) x Prepaid c/d (close) x
x x