Accounts From Incomplete Records: - Single Entry System Module IV (2) of IV

This e-Lecture was Recorded on:
April, 2013
Accounts from
Incomplete Records
Single Entry System
Module IV(2) of IV
CA Intermediate (IPC) Course Paper 1 Accounting
Chapter 10
CA. Prathap. S.S
1
The Institute of Chartered Accountants of India
Disclaimer
1
2
3
ICAI, 2013
This lecture has been delivered by faculty members to supplement the

Study Material, Practice Manual and other content
The views expressed in this lecture are of the Faculty Member.
The content of this video lecture has not been specifically discussed
by the Council of the Institute or any of its Committees and the views
expressed herein may not be taken to necessarily represent the views
of the Council or any of its committees
This e-Lecture was Recorded on:

April, 2013
Important Notes
The e-Lectures, PPT, Podcasts
and Video lectures on ICAI
Cloud Campus aim to
supplement the Study Material,
Practice Manual and
Supplementary Study Material
The lecture recordings are made

according to the syllabus and
laws existing/ applicable as on
the date of recording.
Due to changes in law, there is

likely to be some time gap
between these changes and the
recording of updated lectures.
Hence, students are advised to

refer to the Study Material
including Supplementary Study
Material, if any, and other
relevant legislation for latest
provisions/ amendments
required for forthcoming
examination.
ICAI, 2013
Important Notes
For proper understanding these sums have to be

worked out by the students along with the PPT
teaching.
We are learning through Journal Entries for our

clear understanding.
Journal Entries are not necessary in the

examination unless it is specifically asked .
4
ICAI, 2013
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.
5
ICAI, 2013
Illustration 1
20 marks
Intermediate May 1997
Sanjay Sum
The following is the Balance Sheet of Sanjay a small trader
as on 31.3.96
LIABILITIES
ASSETS
Capital
200000
Fixed asset
145000
Creditors
50000
Stock
40000
Trade debtors
50000
Cash in hand
5000
Cash at bank
10000
250000
ICAI, 2013
250000
Sanjay Sum
A fire destroyed the accounting records as well as the
closing cash of the trader on 31.3.97. However the
following information was available:
1.
Debtors and creditors on 31.3.97 showed an increase
of 20% as compared to 31.3.96
2.
Credit period: Debtors-1 month Creditors- 2 months
3.
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 value
of fixed asset
ICAI, 2013
Sanjay Sum - 2
9. Bank and cash transactions :
a)
Payment to trade creditors included
Rs.50,000 by cash
b)
Receipts from trade debtors included Rs.5,90,000 by way of
cheques.
c)
Cash deposited into Bank Rs. 1,20,000
d)
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 31st
march
(b) A Balance Sheet on that date
Assume Cash Destroyed by Fire is written off in the P&L
A/c.
ICAI, 2013
Requirements of the Sum

The following A/cs have to be opened.
Cash A/c
Bank A/c
Sundry Debtors A/c
Sundry Creditors A/c leading to
Trading A/c, P&L A/c, Closing Balance Sheet.
10
ICAI, 2013
Steps to be followed
We will now deal with the details of Sanjays

adjustments one by one, giving journal entries and
posting it in their respective T a/cs.
11
ICAI, 2013
(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
1 month
12 month
ACS
Closing Creditors
2 months
12 months
ICAI, 2013
ACP
=
=
=
=
=
50,000 * 120 %
60,000
60,000
7,20,000
7,20,000
=
=
=
=
=
50,000 * 120 %
60,000
60,000
3,60,000
3,60,000
12
Debtors & Creditors position

Sundry Debtors A/c
To o/p bal
50,000
By bank
To Credit sales
7,20,000
By cash
By c/s balance
60,000
Sundry Creditors A/c

To Cash
By o/p Bal
To Bank
By Credit Purchases 3,60,000
To c/s Balance
ICAI, 2013
60,000
50,000
13
(c) Stock was maintained at the

same level throughout the year.
So, Closing Stock is same as Opening

Stock at Rs.40,000
14
ICAI, 2013
(d)Cash sales constituted 20% of total

sales.
Total Sales
80%
20%
=
=
cash sales + credit sales

20 % +
80%
=
=
7,20,000
1,80,000
15
ICAI, 2013
(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
To Cash
By o/p Bal
To Bank
To c/s Balance
50,000
60,000
16
ICAI, 2013
(f) Current ratio as on 31.3.97 was exactly 2.

Current ratio
=
=
=
=
=
=
Closing Bank Balance

ICAI, 2013
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
20,000
=
20,000
17
(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.
18
ICAI, 2013
(h) Depreciation was provided at 10%

on the closing value of fixed asset
Fixed Asset
(+)Purchases
=
=
1,45,000
2,25,000
3,70,000
Depreciation
=
=
10%(3,70,000)
37,000
Depreciation
37,000
19
ICAI, 2013
1. Payment to trade creditors

included Rs.50000 by cash
Sundry Creditors A/c
To Cash A/c
Dr.
50,000
50,000
Sundry Creditor A/c

To Cash
To Bank
To c/s Balance
50,000
?
By o/p Bal
50,000
60,000
Cash A/c
To o/p bal
5,000
To Cash Sales
1,80,000
ICAI, 2013
By Creditors
50,000
20
Sundry Creditor A/c

To Cash
To Bank
To c/s
balance
50,000 By o/p balance

By credit
3,00,000
purchase
50,000
3,60,000
60,000
3,90,000
3,90,000
21
ICAI, 2013
2.Receipts from trade debtors included

Rs.590000 by way of cheques.
Bank A/c
Dr.
To Sundry Debtors A/c
5,90,000
5,90,000
Bank A/c
To o/p balance
10,000
To S.Debtors
5,90,000
Sundry Debtors A/c

To o/p bal
50,000
By bank
To Credit sales
7,20,000
By cash
By c/s balance
ICAI, 2013
5,90,000
?
60,000
22
Sundry Debtor A/c

To o/p
balance
To credit sales
50,000 By bank
By cash
7,20,000 By bal c/d
5,90,000
1,20,000
60,000
7,70,000
7,70,000
23
ICAI, 2013
3.Cash deposited into Bank Rs. 120000

Bank A/c
To Cash A/c
Dr.
1,20,000
1,20,000
Bank A/c
To o/p balance
10,000
To S.Debtors
5,90,000
To cash
1,20,000
Cash A/c
To o/p bal
5,000
By Creditors
To Cash Sales
1,80.000 By bank
50,000
1,20,000
24
ICAI, 2013
4.Personal drawings from bank Rs.50000

Drawings A/c
To Bank A/c
Dr.
50,000
50,000
Bank A/c
To o/p balance
10,000
To S.Debtors
5,90,000
To cash
1,20,000
By drawings
50,000
25
ICAI, 2013
5.Fixed assets purchased and paid

by cheques Rs.225000
Furniture A/c
To Bank A/c
Dr.
2,25,000
2,25,000
Bank A/c
To o/p balance
10,000
By drawings
50,000
To S.Debtors
5,90,000
By Fixed Assets
2,25,000
To cash
1,20,000
26
ICAI, 2013
Bank A/c
To Opening bal
To S. Debtors
To Cash
10,000 By drawings
5,90,000 By Sundry.Crs
1,20,000 By Fixed Assets
By Expenses paid
By Closing bal
7,00,000
50,000
3,00,000
2,25,000
1,25,000
20,000
7,00,000
27
ICAI, 2013
Cash A/c
To o/p bal
To S.Debtors
To cash sales
5,000 By Creditors
1,20,000 By bank
1,80,000 By expenses
By abnormal loss
By c/s cash
3,05,000
50,000
1,20,000
1,25,000
10,000
0
3,05,000
28
ICAI, 2013
Trading A/c
To o/p stock
To Purchases
To Gross Profit
40,000 By sales
3,60,000 By c/s stock
5,40,000
9,40,000
9,00,000
40,000
9,40,000
29
ICAI, 2013
Profit & Loss A/c

To expenses
To depreciation
To abnormal loss
To Net profit c/d
2,50,000 By gross
37,000 profit b/d
10,000
2,43,000
5,40,000
5,40,000
5,40,000
30
ICAI, 2013
B/s of Sanjay as on 31.3.97

Capital
2,00,000
(-)drawings(50,000)
(+)profit 2,43,000
S. Creditor
Fixed Assets 370000

(-) Dep
(37,000)
3,93,000 Stock
60,000 Debtors
Cash
Bank
3,33,000
40,000
60,000
0
20,000
4,53,000
4,53,000
31
ICAI, 2013
Summary
This is a very interesting sum where we learn to use

the velocities (Sundry Creditors & Sundry Debtors)
as well as current ratio .
32
ICAI, 2013
Thank You
33
Do keep moving forward

Accounts From Incomplete Records: - Single Entry System Module IV (2) of IV

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Accounts From Incomplete Records: - Single Entry System Module IV (2) of IV

Uploaded by

Copyright:

Available Formats

This e-Lecture was Recorded on:

The Institute of Chartered Accountants of India

This lecture has been delivered by faculty members to supplement the

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

This e-Lecture was Recorded on:

The lecture recordings are made

Due to changes in law, there is

Hence, students are advised to

For proper understanding these sums have to be

We are learning through Journal Entries for our

Journal Entries are not necessary in the

Requirements of the Sum

We will now deal with the details of Sanjays

(a) Debtors and creditors on 31.3.97 showed an

Debtors & Creditors position

Sundry Creditors A/c

By Credit Purchases 3,60,000

(c) Stock was maintained at the

So, Closing Stock is same as Opening

(d)Cash sales constituted 20% of total

cash sales + credit sales

(e) All purchases were for credit

By Credit Purchases 3,60,000

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

Closing Bank Balance

current assets/ current liabilities

(g) Total expenses excluding depreciation

We don't know how much of

(h) Depreciation was provided at 10%

1. Payment to trade creditors

Sundry Creditor A/c

By Credit Purchases 3,60,000

Sundry Creditor A/c

50,000 By o/p balance

2.Receipts from trade debtors included

Sundry Debtors A/c

Sundry Debtor A/c

3.Cash deposited into Bank Rs. 120000

4.Personal drawings from bank Rs.50000

5.Fixed assets purchased and paid

Profit & Loss A/c

B/s of Sanjay as on 31.3.97

Fixed Assets 370000

This is a very interesting sum where we learn to use

Do keep moving forward

You might also like