SingleEntryExamplePartIV

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Accounts from

Incomplete Records

Single Entry System

Module IV(2) of IV

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CA Intermediate (IPC) Course Paper 1 Accounting

Chapter 10

CA. Prathap. S.S

The Institute of Chartered Accountants of India

This e-Lecture was Recorded on:

April, 2013


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1 This lecture has been delivered by faculty members to supplement the

Study Material, Practice Manual and other content

2 The views expressed in this lecture are of the Faculty Member.

3

The content of this video lecture has not been specifically discussed

by the Council of the Institute or any of its Committees and the viewsexpressed herein may not be taken to necessarily represent the viewsof the Council or any of its committees

2

Disclaimer


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The e-Lectures, PPT, Podcastsand Video lectures on ICAI

Cloud Campus aim tosupplement the Study Material,

Practice Manual and

Supplementary Study Material

The lecture recordings are madeaccording to the syllabus andlaws existing/ applicable as on

the date of recording.

Due to changes in law, there is

likely to be some time gapbetween these changes and therecording of updated lectures.

Hence, students are advised torefer to the Study Material

including Supplementary Study

Material, if any, and otherrelevant legislation for latest

provisions/ amendmentsrequired for forthcoming

examination.

Important Notes

This e-Lecture was Recorded on:

April, 2013

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Agenda

To apply Sundry Creditors and Sundry debtors

velocity to calculate Annual Credit Purchase and

Annual Credit Sales respectively.

To learn to use current ratio to ascertain missing

figures.

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Illustration 1

20 marksIntermediate May 1997

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Sanjay Sum

The following is the Balance Sheet of Sanjay a small trader

as on 31.3.96

LIABILITIES ASSETS

Capital 200000 Fixed asset 145000Creditors 50000 Stock 40000

Trade debtors 50000

Cash in hand 5000

Cash at bank 10000

250000 2500007


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Sanjay Sum

A fire destroyed the accounting records as well as theclosing cash of the trader on 31.3.97. However thefollowing information was available:

1. Debtors and creditors on 31.3.97 showed an increaseof 20% as compared to 31.3.96

2. Credit period: Debtors-1 month Creditors- 2 months3. Stock was maintained at the same level throughout the

year.

4. Cash sales constituted 20% of total sales.

5. All purchases were for credit only.

6. Current ratio as on 31.3.97 was exactly 2.7. Total expenses excluding depreciation for the year

amounted to Rs. 250000

8. Depreciation was provided at 10% on the closing valueof fixed asset

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Sanjay Sum - 2

9. Bank and cash transactions :

a) Payment to trade creditors includedRs.50,000 by cash

b) Receipts from trade debtors included Rs.5,90,000 by way ofcheques.

c) Cash deposited into Bank Rs. 1,20,000d) Personal drawings from bank Rs.50,000

e) Fixed assets purchased and paid by cheques Rs.2,25,000

You are required to prepare,

(a) Trading and profit and loss account for the year ended 31stmarch

(b) A Balance Sheet on that date

Assume Cash Destroyed by Fire is written off in the P&LA/c. 9


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Requirements of the Sum

The following A/cs have to be opened.

Cash A/c

Bank A/cSundry Debtors A/c

Sundry Creditors A/c leading to

Trading A/c, P&L A/c, Closing Balance Sheet.

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Steps to be followed

We will now deal with the details of Sanjaysadjustments one by one, giving journal entries and

posting it in their respective T a/cs.

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(a) Debtors and creditors on 31.3.97 showed an

increase of 20 as compared to 31.3.96

(b) Credit period: Debtors - 1 month,

Creditors - 2months

Closing Debtors = 50,000 * 120 %

= 60,000

1 month = 60,00012 month = 7,20,000

ACS = 7,20,000

Closing Creditors = 50,000 * 120 %

= 60,000

2 months = 60,000

12 months = 3,60,000

ACP = 3,60,000

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Debtors & Creditors position

To o/p bal 50,000 By bank ?

To Credit sales 7,20,000 By cash ?

By c/s balance 60,000

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To Cash ? By o/p Bal 50,000

To Bank ? By Credit Purchases 3,60,000

To c/s Balance 60,000

Sundry Creditors A/c

Sundry Debtors A/c


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(c) Stock was maintained at the

same level throughout the year.

So, Closing Stock is same as OpeningStock at Rs.40,000

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(d)Cash sales constituted 20 of total

sales.

Total Sales = cash sales + credit sales

= 20 % + 80%

80% = 7,20,000

20% = 1,80,000

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(e) All purchases were for credit

only.

So, Cash Purchases is Nil. So

Total Purchases consist only of Credit

Purchases which is Rs.3,60,000

Sundry Creditor A/c

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To Cash ? By o/p Bal 50,000




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(f) Current ratio as on 31.3.97 was exactly 2.

Current ratio = current assets/ current liabilities

= stock + Debtors + cash + bank

Creditors

= 2= 40,000 + 60,000 + 0 + x = 2

60,000

= 1,00,000 + x = 1,20,000

x = 20,000

Closing Bank Balance = 20,00017


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(g) Total expenses excluding depreciation

for the year amounted to Rs. 250000

We don't know how much of

this 2,50,000 is paid in cash and how much

has paid out of Bank.

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(h) Depreciation was provided at 10

on the closing value of fixed asset

Fixed Asset = 1,45,000

(+)Purchases 2,25,000

= 3,70,000

Depreciation = 10%(3,70,000)

= 37,000

Depreciation = 37,000

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1. Payment to trade creditors

included Rs.50000 by cash

Sundry Creditor s A/c Dr. 50,000

To Cash A/c 50,000

Sundry Creditor A/c

Cash A/c

20To o/p bal 5,000 By Creditors 50,000

To Cash Sales 1,80,000

To Cash 50,000 By o/p Bal 50,000




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Sundry Creditor A/c

To Cash 50,000 By o/p balance 50,000

By credit

To Bank 3,00,000 purchase 3,60,000

To c/s

balance 60,000

3,90,000 3,90,000

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2.Receipts from trade debtors included

Rs.590000 by way of cheques.

Bank A/c Dr. 5,90,000

To Sundry Debtor s A/c 5,90,000

Bank A/c

Sundry Debtors A/c

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To o/p balance 10,000

To S.Debtors 5,90,000

To o/p bal 50,000 By bank 5,90,000

To Credit sales 7,20,000 By cash ?

By c/s balance 60,000


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Sundry Debtor A/c

To o/p 50,000 By bank 5,90,000

balance By cash 1,20,000

To credit sales 7,20,000 By bal c/d 60,000

7,70,000 7,70,000

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3.Cash deposited into Bank Rs. 120000

Bank A/c Dr. 1,20,000

To Cash A/c 1,20,000

Bank A/c

Cash A/c

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To o/p balance 10,000

To S.Debtors 5,90,000

To cash 1,20,000

To o/p bal 5,000 By Creditors 50,000

To Cash Sales 1,80.000 By bank 1,20,000


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4.Personal drawings from bank Rs.50000

Drawings A/c Dr. 50,000

To Bank A/c 50,000

Bank A/c

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To o/p balance 10,000 By drawings 50,000To S.Debtors 5,90,000

To cash 1,20,000


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5.Fixed assets purchased and paid

by cheques Rs.225000

Furniture A/c Dr. 2,25,000

To Bank A/c 2,25,000

Bank A/c

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To o/p balance 10,000 By drawings 50,000To S.Debtors 5,90,000 By Fixed Assets 2,25,000

To cash 1,20,000


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Bank A/c

To Opening bal 10,000 By drawings 50,000

To S. Debtors 5,90,000 By Sundry.Crs 3,00,000To Cash 1,20,000 By Fixed Assets 2,25,000

By Expenses paid 1,25,000

By Closing bal 20,000

7,00,000 7,00,000

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Cash A/c

To o/p bal 5,000 By Creditors 50,000

To S.Debtors 1,20,000 By bank 1,20,000

To cash sales 1,80,000 By expenses 1,25,000

By abnormal loss 10,000

By c/s cash 0

3,05,000 3,05,000

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Trading A/c

To o/p stock 40,000 By sales 9,00,000

To Purchases 3,60,000 By c/s stock 40,000

To Gross Profit 5,40,000

9,40,000 9,40,000

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Profit & Loss A/c

To expenses 2,50,000 By gross 5,40,000

To depreciation 37,000 profit b/d

To abnormal loss 10,000

To Net profit c/d 2,43,000

5,40,000 5,40,000

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B/s of Sanjay as on 31.3.97

Capital 2,00,000 Fixed Assets 370000

(-)drawings(50,000) (-) Dep (37,000)

(+)profit 2,43,000 3,33,000

3,93,000 Stock 40,000

S. Creditor 60,000 Debtors 60,000

Cash 0Bank 20,000

4,53,000 4,53,000

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Summary

This is a very interesting sum where we learn to use

the velocities (Sundry Creditors & Sundry Debtors)

as well as current ratio .

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Thank You

Do keep moving forward33

SingleEntryExamplePartIV

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