Incomplete Records/Single Entry 📖

Single entry may be defined as a system of bookkeeping that does not follow the principles of the double-entry system. It is also referred to as incomplete records. 📝

Calculation of Sales 💰

If a business does not keep a record of its sales on credit, the value of these sales can be derived from the opening balance of trade debtors, the closing balance of trade debtors, and the payments received from debtors during the period. 📊

Sales Formula 📈

Closing debtors balance: xxxx
Add: Receipts from debtors during the year: xxxx
Less: Opening balance of debtors: (xxxx)
Total sales for the year: xxxx

Example 🧮

Suppose that a business had trade debtors of K1,750 on 1st April 2015 and trade debtors of K3,140 on 31 March 2016. Payments received from trade debtors during the year to 31st March 2016 were K28,490. Calculate the credit sales:

Calculating the Purchases 🛒

The similar relationship exists between purchases of stock during a period, the opening and closing balances for trade creditors, and the amount paid during the year to creditors. 💳

Purchases Formula 🧾

Closing balance of creditors: xxxx
Add: Payments to trade creditors during the year: xxxx
Less: Opening balance of trade creditors: xxxx
Total purchases for the year: xxxx

Example 🧮

The business had trade creditors of K3,728 on 1 January 2016 and creditors of K2,645 on 31 December 2016. If payments to trade creditors during the year to 31st December 2016 were K31,479, calculate the purchases.

Calculating the Opening and Closing Capital 💼

When calculating capital at the start or end, we use the statement of affairs (Balance Sheet) or the Journal. 📑

Opening Capital 💵

It is calculated using the balance sheet equation: Capital = Assets – Liabilities.
All liabilities at the start of the trading period are subtracted from the assets at the start using the journal or statement of affairs.

Closing Capital 📊

It is calculated similarly, by subtracting liabilities at the end of the trading period from assets at the end.

Determining the Trader’s Annual Profit 📈

To determine the net profit or loss for the year, we calculate the capital at the start and end of the trading period. If the capital at the end is greater than at the start, this indicates a profit, while a decrease indicates a loss. 📉

Example 🧮

Bwalya, who does not keep proper books, provides the following details for the year ended 31st December 2016. You are required to calculate his net profit:

During the year, Bwalya withdrew K100 per week in cash and K40 per week in goods for his personal use. He also injected K1,000 of extra capital from a win on football pools. 🎉

Journal as at 1st January 2016 📅

Journal as at 31st December 2016 📅

Statement of Net Profit/Loss for the Year Ended 31 December 2016 📊

Capital at the end of the year: K 17,930 💵
Less: Capital at the beginning of the year: K 3,900 💵
Apparent profit: K 14,030 💰
Add: Drawings in cash: K 5,200 💵
Add: Drawings in kind: K 2,080 🎁
Net profit for the year: K 21,310 💰

Examination Questions 📚

Question 1 ❓

Bwalya started business on 1 July 2013 with the following details:
- Cash in hand: K500 💵
- Cash at bank: K200 💵
- Buildings: K2000 🏢
- Debtors: K2300 💳
- Creditors: K300 💸
- Fixtures: K1300 🛠️
During the first year, he kept few records, but the following information is available regarding the assets and liabilities at 30th June 2014.

During the year to 30th June 2015, Bwalya withdrew K3,500 in cash and K200 of goods for personal use. He also sold his private vehicle and deposited K800 into the business bank account. Depreciate fixtures at 10%. 📉

Question 2 ❓

Chanda is a sole trader who does not keep the books of the business on the twofold system. However, the following information is available from the books:

All sales and purchases are made on a credit basis. Receipts from debtors during the year amounted to K54,800,000 💰, and payments to creditors amounted to K32,640,000 💸. You are required to calculate the total sales and purchases for the year and the rate of stock turnover. 📊

Question 3 ❓

Chanda started business on July 1, 2008, with capital in cash of K5,000,000 💵. The following assets and liabilities were available on June 30, 2009:

Chanda withdrew K3,500,000 in cash 💵 and K200,000 in goods during the year. Prepare a balance sheet and a statement of profit and loss for the year ended June 30, 2009, showing all workings. 📊

Question 4 ❓

SKM's accountant makes the following summary from his client's cash book for the year ended December 31, 2016:

Question 5 ❓

SKM Stars did not keep a full set of books but provided the following information for January 2016:

On December 31, 2016, SKM Stars valued his stock at K76,000 📦 and his debtors at K60,000 💳. Prepare the trading and profit and loss account for the year and the balance sheet as of that date. 📊

During the year to 30 June 2015, Bwalya withdrew K3,500 in cash from the business for personal purposes and K200 worth of goods at cost. Additionally, he sold his private motor vehicle and paid K800 into the business bank account. Bwalya decided to depreciate fixtures at 10% on 30 June 2014.

Required:

You are required to prepare a statement under a proper heading to show Bwalya’s profit. Show all your workings within the statement.

Question 2 ❓

Chanda is a sole trader who does not keep the books of the business on the twofold system. However, the following information is available:

All sales and purchases are made on credit. Receipts from debtors during the year amounted to K54,800,000 💰 and payments to creditors during the year were K32,640,000 💸.

Required:

• Calculate the sales and purchases totals for the year ended 31 December 2016.
• Calculate the rate of stock turnover.
• Explain how Chanda could use the information from (b).

Question 3 ❓

Chanda started business on 1 July 2008 with a capital of K5,000,000 💵. During the year, the following assets and liabilities were available on 30 June 2009:

During the year, Chanda withdrew K3,500,000 in cash 💵 and K200,000 in goods at cost for his personal use. He also sold his private vehicle and paid K800,000 into the business bank account. Chanda agrees to a provision of K50,000 for bad and doubtful debts and K200,000 for depreciation on fixtures.

Required:

From the following information, prepare a statement of affairs (balance sheet) showing the financial position of the business on 30 June 2009, and a statement of profit and loss for the year ended 30 June 2009. Show all workings.

Question 4 ❓

SKM’s accountant makes up the following bank summary from his client’s cash book for the year ended 31 December 2016:

On 1 January 2016, the assets and liabilities were as follows: Stock in trade (K128,000), Trade debtors (K386,000), Trade creditors (K940,000), Delivery van 🚚 (K1,200,000), and Office equipment 🖥️ (K176,000).

Required:

• Total creditors account to calculate the total purchases.
• Total debtors account to calculate the total sales.
• Trading and profit and loss account for the year ended 31 December 2016.
• Calculation of capital at the start.
• Balance sheet as of 31 December 2016.

Question 5 ❓

SKM Stars does not keep a full set of books but provided the following information on 1 January 2016:

• Premises 🏢: K120,000
• Furniture 🪑: K30,000
• Stock 📦: K95,000
• Debtors 💳: K50,000
• Bank balance 💵: K42,000
• Cash 💵: K1,000
• Creditors 💸: K49,000
• ZESCO electricity bill ⚡: K2,000

All cash takings were banked daily, except for K800 each week (52 weeks) which was used for personal purposes. The bank statement for 2016 and notes on credit sales are as follows:

Required:

• Prepare the trading and profit and loss account for the year ended 31 December 2016.
• Prepare the balance sheet as of that date.