Accounts from Incomplete Records Single Entry System. Module III of IV. CA. Prathap.S.S

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Felicity Primrose Wilkerson
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1 Accounts from Incomplete Records Single Entry System Module III of IV CA. Prathap.S.S 1

2 Agenda Module III To learn to do full fledged 16 marks sum in Single Entry. With the data provided : To prepare the Opening Balance Sheet, ascertain the Capital employed To prepare the Trading and P & L A/c To prepare the Closing Balance Sheet

3 PCC, Nov 2008 PE II, Nov 2006 Lucky Sum (16 marks) 3

4 Lucky Sum Lucky does not maintain proper books of accounts. However he maintains a record of his bank transactions and also is able to give the following information from the following information from which we request to prepare his final accounts for the year 2003 :

5 Opening and Closing B/s Debtors 1,01,500 Creditors 46,000 Stock 50,000 62,500 Bank Balance 50,000 Fixed Assets 7,500 9,000

6 Lucky s Bank Transactions Received from debtors 3,40,000 Additional Capital brought in 5,000 Sale of fixed Assets(book value Rs.2500) 1,750 Paid to Creditors 2,80,000 Expenses paid 49,250 Personal drawings 25,000 Purchase of fixed Assets 5,000 Cost of goods sold 2,60,000 Goods are sold at cost plus 25%. No Cash Transactions took place during the year.

7 Approach to the Sum Prepare opening balance sheet. T A/c s has to be prepared for the missing entries. Prepare Trading, P&L A/c for the y.e Missing figures are Purchase and Sales. Open Sundry Creditor A/c and Sundry Debtor A/c.

8 Approach to the Sum For gross profit the relationship is 1/4 th of cost of goods sold. Filling up the details provided we get the following balance sheet and trading account.

9 Balance Sheet of Lucky as on Opening Capital? Sundry Debtors 1,02,500 Stock 50,000 Bank? Sundry Creditors? Fixed Assets 7,500 Total 9

10 Trading A/c of Lucky as on To Opening Stock 50,000 By Sales? To Purchase? To Gross profit c/d By Closing Stock 62,500 (1/4 th of cost ) Total 10

11 Sundry Creditor A/c To Bank? By o/p balance? To c/s 46,000 By Credit? balance Purchase Total Sundry Debtors A/c To o/p 1,02,500 By Bank? balance To Credit Sales? By bal c/d? Total

12 We will now deal with the details of Lucky s bank transactions one by one, giving journal entries and posting it in their respective T a/c s.

13 Amount received from debtors Rs. 3,40,000 Bank A/c Dr. 3,40,000 To Sundry debtors A/c 3,40,000 Bank A/c To Opening balance? To Sundry Debtors 3,40,000 Debtors A/c To Opening balance 1,02,500 By Bank 3,40,000

14 Additional capital brought in Bank A/c Dr. 5,000 To Capital A/c 5,000 Bank A/c To Opening balance? To Sundry Debtors 3,40,000 To Capital 5,000

15 Sale of Fixed Assets Bank A/c Dr. 1,750 Loss on sale A/c Dr. 750 To Fixed Assets A/c 2,500 Bank A/c To Opening balance? To Sundry Debtors 3,40,000 To Capital 5,000 To sale of Fixed Asset 1,750 Fixed Asset A/c To opening balance 7500 By bank 1750 By loss on sale of fixed asset 750

16 Amount paid to Creditors Sundry Creditors A/c Dr. 2,80,000 To Bank A/c 2,80,000 Sundry Creditors A/c To Bank 2,80,000 By O/pBal? Bank A/c To Opening balance? By Sundry Creditors To Sundry Debtors 3,40,000 To Capital 5,000 To sale of Fixed Asset 1,750 2,80,000

17 Expenses Paid Expenses A/c Dr. 49,250 To Bank A/c 49,250 Bank A/c To Opening balance? By Sundry Creditors 2,80,000 To Sundry Debtors 3,40,000 By Expenses 49,250 To Capital 5,000 To sale of Fixed Asset 1,750

18 Amount drawn for personal use Drawings A/c Dr. 25,000 To Bank A/c 25,000 Bank A/c To Opening balance? By Sundry Creditors 2,80,000 To Sundry Debtors 3,40,000 By Expenses 49,250 To Capital 5,000 By Drawings 25,000 To sale of Fixed Asset 1,750

19 Fixed Asset Purchased Fixed Asset A/c Dr. 5,000 To Bank A/c 5,000 Bank A/c To Opening balance? By Sundry Creditors Fixed Asset A/c 2,80,000 To Sundry Debtors 3,40,000 By Expenses 49,250 To Capital 5,000 By Drawings 25,000 To sale of Fixed Asset 1,750 By Fixed asset 5,000 To opening balance 7500 By bank 1750 To Bank 5,000 By loss on sale of fixed asset 750

20 Bank A/c To Opening balance 62,500 By Sundry Creditors 2,80,000 To Sundry Debtors 3,40,000 By Expenses 49,250 To Capital 5,000 By Drawings 25,000 To sale of Fixed Asset 1,750 By Fixed asset 5,000 4,09,250 4,09,250

21 Trading A/c of Lucky as on To Opening Stock 50,000 By Sales? To Purchase? To Gross profit c/d By Closing Stock 62,500 (1/4 th cost)? Total 21

22 Calculation of Gross Profit Gross Profit = 25 % on cost COGS = 2,60,000 G.P = 1/4(2,60,000) = 65,000 Trading A/c To opening stock 50,000 To Gross Profit c/d 65,000 By closing stock 62,500

23 Calculation of ACS Sales = 2,60, ,000 = 3,25,000 Trading A/c To opening stock 50,000 By Sales 3,25,000 To Gross Profit 65,000 By closing stock 62,500

24 Calculation of ACP COGS = O/p stock + Purchases C/s stock Purchases = COGS O/p Stock + C/s stock Purchases = 2,60, ,500 50,000 Purchases = 2,72,500. Trading A/c To opening stock 50,000 By Sales 3,25,000 To Purchases 2,72,500 To Gross Profit 65,000 By closing stock 62,500

25 Trading A/c To opening stock 50,000 By sales 3,25,000 To Purchases 2,72,500 To Gross profit c/d 65,000 By c/s stock 62,500 3,87,500 3,87,500 25

26 Fixed Assets A/c To opening balance 7500 By bank 1750 To bank 5,000 By loss on sale of fixed asset 750 By depreciation 1000 By c/s ,500 12,500

27 Profit & Loss A/c To expenses 49,250 By gross 65,000 To loss of sale 750 profit b/d To depreciation 1,000 To Net profit c/d 14,000 65,000 65,000 27

28 Sundry Debtors A/c To Opening bal 1,02,500 By Bank 3,40,000 To Credit Sales 3,25,000 By Balance c/d 87,

29 Sundry Creditors A/c To Bank 2,80,000 By Opening bal 53,500 To c/s bal 46,000 By Credit purchase 2,72,500 3,26,000 3,26,000

30 B/S of Lucky as on Opening Capital 1,69,000 S.Debtors 1,02,500 Stock 50,000 Bank 62,500 S.Creditors 53,500Fixed Assets 7,500 2,22,500 2,22,500 30

31 B/s of Lucky as on Capital 1,69,000 S. Debtor 87,500 (+)add.cap 5,000 Stock 62,500 (+)profit 14,000 Bank 50,000 ( )drawings 25,000 1,63,000 Assets 9,000 S. Creditor 46,000 2,09,000 2,09,000 31

32 Summary We learnt how to proceed line by line into the sum. All the data given in the form of balances have first to be incorporated in the respective T accounts, or the opening Balance Sheet / Closing Balance Sheet. Concentrate first on completing the Trading account, then move on to P & L A/c.

33 Summary (contd..) All the T accounts opened have to be closed. Complete the Closing Balance Sheet, making sure all the items in the Opening Balance Sheet have been dealt with.

34 Thank You Do keep moving forward 34

Internal Reconstruction

1 Internal Reconstruction IPCC Paper 1 : Accounting Chapter V CA. S.S. Prathap, FCA 2 Learning Objectives To understand the concept of Internal reconstruction Learn to pass Reconstruction / Capital Reduction