This e-Lecture was Recorded on:

December 18, 2012

ACCOUNTS FROM
INCOMPLETE RECORDS
SINGLE ENTRY SYSTEM
MODULE IV(1) 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, 2012

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

IMPORTANT NOTES

This e-Lecture was Recorded on:

December 18, 2012

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, 2012

AGENDA
To learn to do full
fledged 16 marks/20 marks
sum which were asked in the
previous exams.

ICAI, 2012

IPCC(RASHID SUM)
(20 marks

Intermediate May 1998)

Rashid Sum
Shri Rashid furnishes you with the following information
relating to his business
(a) Assets and Liabilities as on : 1.1.97
31.12.97
Rs
Rs
Furniture (W.D.V)
6000
6350
Stock at cost
8000
7000
Sundry debtors
16000
?
Sundry creditors
11000
15000
Prepaid expenses
600
700
Unpaid expenses
2000
1800
Cash in hand and at Bank
1200
625

.....Rashid Sum

(b) Receipts and payments during 1997.

1. Collection from trade debtors after allowing
discount of Rs. 1500 amounted to Rs. 58500 .
2. Collection on discounting of bills of exchange
after discounting of Rs.125 by the bank, totalled
to Rs.6125.
3. Creditors of Rs.40000 were paid Rs. 39200 in
full settlement of their dues.
4. Payment for freight inwards Rs. 3000.

.....Rashid Sum
5. Amount withdrawn for personal use Rs.7000.
6. Payment for office furniture Rs.1000.
7. Investment carrying annual interest of 4%
was purchased at Rs.96 on 1.7.97 and
payment made.
8. Expenses including salaries paid Rs.14500.
9. Miscellaneous receipts Rs.500.

.....Rashid Sum
(c) Bills of exchange drawn on and accepted by
customers during the year amounted to Rs.10000
of these, bills of exchange of Rs.2000 were
endorsed in favour of creditors and endorsed bill
of exchange of Rs. 400 was dishonored.
(d) Goods costing Rs. 900 were used as advertising
materials.
(e) Goods are invariably sold to show a gross profit
of 331/3% on sales.

.....Rashid Sum
(f) Differences in cash book, if any, is to be,
treated as further drawings or introduction by
Shri Rashid.
(g) provide 2.5% for doubtful debts on closing
debtors
Rashid asks you to prepare a
trading and profit and loss A/c for the year
31.12.97 and the balance sheet as on that
date.

APPROACH TO THE SUM

In this sum all the figures for Opening Balance
Sheet have been provided .
The Balancing figure is the Opening Capital of
Rashid , which comes to Rs.18,800 , which is
ascertained as follows from the Opening Balance
Sheet.

ICAI, 2012

Balance Sheet of Rashid as on

01.01.1997

Opening Capital 18,800 Sundry Debtors

(balancing figure)
Furniture
Stock
Outstanding exp. 2,000 Prepaid expenses
Sundry Creditors 11,000 Cash
Total
31,800

16,000
6,000
8,000
600
1,200
31,800

12

REQUIREMENTS OF THE SUM

The following A/cs need to be opened :
(i)Trading , Profit and Loss A/c y.e 31.12.1997
(ii)Cash and Bank A/c
(iii)Sundry Debtors A/c & Bills Receivables A/c
(iv)Sundry Creditors A/c
(v)Furniture A/c

ICAI, 2012

STEPS TO BE FOLLOWED

We will now deal with the details of

Rashids cash and bank transactions one by one ,
giving journal entries and posting it in their
respective T a/cs.

ICAI, 2012

JOURNAL ENTRIES

(1)Collection from trade debtors after allowing

discount of Rs. 1500 amounted to Rs. 58500 .
Cash A/c
Dr.
Discount A/c
Dr.
To Sundry Debtors A/c
Cash A/c
To Opening Balance
To Sundry Debtors

1,200
58,500

58,500
1,500
60,000

By Closing balance

625

Debtors A/c
To Opening Balance
ICAI, 2012

16,000

By Cash
By Discount

58,500
1,500

(2)Collection on discounting of bills of exchange after

discounting of Rs.125 by the bank, totalled to Rs.6125.

Cash A/c
Discount A/c
To Bills Receivables A/c
Cash A/c

Dr.
Dr.

6,125
125
6,250

To Opening Balance

1200

To Sundry Debtors

58,500

To Bills of Exchange

6125

By Closing Balance

625

Bills Receivables A/c

By Cash
By Discount
ICAI, 2012

6125
125

(3)Creditors of Rs.40000 were paid Rs. 39200 in

full settlement of their dues.
Sundry Creditor A/c
To Cash A/c
To Discount A/c

Dr.

40,000
39,200
800

Cash A/c
To Opening Balance

1200

To Sundry Debtors

58,500

By Sundry Creditors

39,200

To Bills of Exchange

6125

By Closing Balance

625

Creditor A/c
To Cash
To Discount
To Balance b/d
ICAI, 2012

39,200
800
15,000

By Opening Balance

11,000

(4)Payment for freight inwards Rs. 3000.

Freight Inwards A/c
To Cash A/c

Dr. 3,000
3,000

Cash A/c
To Opening Balance
To Sundry Debtors
To Bills of Exchange

1200
58,500
6125

By Sundry Creditors 39,200

By Freight Inward
3,000
By Closing Balance 625

Freight Inward will be debited to Trading A/c .

ICAI, 2012

(5)Amount withdrawn for personal use Rs.7000.

Drawings A/c
To Cash A/c
To Opening Balance

Dr. 7,000
7,000
Cash A/c

1200

By Freight inward

3,000

To Sundry Debtors

58,500

By Sundry Creditors

39,200

To Bills of Exchange

6125

By Drawings

7,000

By Closing Balance

625

Drawings will be reduced from the closing capital in the

closing Balance Sheet

ICAI, 2012

(6)Payment for office furniture Rs.1000.

Furniture A/c
To Cash A/c

Dr.

1,000
1,000

Cash A/c
To Opening Balance

1200

By Freight inward

3,000

To Sundry Debtors

58,500

By Sundry Creditors

39,200

To Bills of exchange

6125

By Drawings

7,000

By Furniture

1,000

By Closing balance

625

Furniture A/c
To opening balance

6,000

To Cash

1,000

ICAI, 2012

By closing balance

6350

(7)Investment carrying annual interest of 4% was

purchased at Rs.96 on 1.7.97 and payment made

Assumptions :
The face value of investment was
Rs.100 but was purchased for Rs.96 on 1st July
1997 at 4 % interest.
Interest receivable = 100 * 4 % * (6/12)
= Rs.2
All Interest Receivables should
be credited to P&L a/c & added to the
investment in the Balance Sheet.
ICAI, 2012

....Contd
4% Investment A/c
Dr.
To Cash A/c
Interest Accrued A/c
Dr.
To Interest Receivables A/c
Cash A/c

96
96
2
2

To Opening Balance

1200

By Freight inward

3,000

To Sundry Debtors

58,500

By Sundry Creditors

39,200

To Bills of exchange

6,125

By Drawings

7,000

To Misc. Receipts

500

By Furniture

1,000

By 4% Investment

96

By Closing balance

625

ICAI, 2012

(8)Expenses including salaries paid Rs.14500.

Calculation of Exp :
Cash paid for expenses
(+) Prepaid expenses paid
last year
(-) Prepaid expenses paid
this year
(-) Last year outstanding
expenses
(+) This year outstanding
expenses
Amount to be debited to P&L
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14,500
600
(700)
(2,000)
1,800
14,200

(9)Miscellaneous receipts Rs.500.

Cash A/c
Dr.
To Miscellaneous Receipts A/c
Cash A/c
To Opening Balance
To Sundry Debtors
To Bills of exchange
To Misc. Receipts

1200
58,500
6,125
500

500
500

By Freight inward
By Sundry Creditors
By Drawings
By Furniture
By 4 % Investment
By Closing balance

3,000
39,200
7,000
1,000
96
625

Miscellaneous Receipts will appear in the Credit side of P

& L A/c
ICAI, 2012

Bank and Cash A/c

To Opening Balance 1,200 By Freight inward
3,000
To Sundry Debtors 58,500 By Sundry Creditors 39,200
To Bills of exchange 6,125 By Drawings
7,000
To Misc. Receipts
500 By Furniture
1,000
By Expenses paid
14,500
By Investment
96
By Drawings
904
By Closing balance
625
66,325
66,325
ICAI, 2012

(C)Bills of exchange drawn on and accepted by customers

during the year amounted to Rs.10000 , of these bills of
exchange of Rs.2000 were endorsed in favour of creditors
and endorsed bill of exchange of Rs. 400 was dishonored.
Bills of exchange drawn on & accepted by customers during
the year amounted to Rs.10,000.
Bills Receivables A/c
Dr.
10,000
To Sundry Debtors A/c
10,000
Of these Rs.2000 were endorsed in favour of Creditors.
Sundry Creditors A/c
Dr.
2,000
To Bills Receivables A/c
2,000
An endorsed Bill of exchange of Rs.400 was dishonoured.
Sundry Debtors A/c
Dr.
400
To Sundry Creditors A/c
400
ICAI, 2012

Sundry Debtors A/c

To Opening
16,000 By Cash
58,500
balance
By Discount
1,500
To Sundry Creditors 400 By Bills Receivables 10,000
To Credit Sales
73,050 By Bal c/d
?

ICAI, 2012

Bills Receivables A/c

To Sundry Debtors 10,000 By discount
125
(Bills Receivables
By bank
6,125
drawn & accepted)
By Sundry
Creditors 2,000
By Closing
balance
?

ICAI, 2012

Sundry Creditors A/c

To Cash
39,200 By o/p balance
11,000
To Discount
800 By Credit
To Bills
Purchase
?
Receivables
2,000 By Sundry Debtors
400
To closing
balance
15,000

ICAI, 2012

Sundry Creditors A/c

To Cash
39,200 By o/p balance
11,000
To Discount
800 By Credit
To Bills
Purchase
45,600
Receivables
2,000 By Sundry Debtors
400
To closing
balance
15,000
57,000

ICAI, 2012

57,000

Bills Receivables A/c

To Sundry Debtors 10,000 By discount
(Bills Receivables
By bank
drawn & accepted)
By Sundry
Creditors
By Closing
balance
10,000
ICAI, 2012

125
6,125
2,000
1,750
10,000

(d)Goods costing Rs.900 were used as

advertising materials.
Advertisement A/c
To Purchases A/c

Dr.

900
900

Note :
Advertisement will be debited to P&L A/c
and reduced from Purchases in Trading A/c.

ICAI, 2012

(f)Differences in cash books, if any, is to be, treated

as further drawings or introduction by Shri Rashid.

The Balancing figure in Cash

Book is Rs. 904 appearing on the credit side ,
so it represents drawings by Rashid.

ICAI, 2012

Bank and Cash A/c

To Opening Balance 1,200 By Freight inward
3,000
To Sundry Debtors 58,500 By Sundry Creditors 39,200
To Bills of exchange 6,125 By Drawings
7,000
To Misc. Receipts
500 By Furniture
1,000
By Expenses paid
14,500
By Investment
96
By Drawings
904
By Closing balance
625
66,325
66,325
ICAI, 2012

Furniture A/c
To Opening
Balance
To Cash

By Depreciation
6,000
1,000
By Closing Balance
7,000

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650

6,350
7,000

(e)Goods are invariably sold to show

a gross profit of 331/3% on sales.
Calculation of Gross Profit :
COGS = O/p stock + Purchases +
Direct expenses - c/s stock
= 8,000 + 44,700 + 3,000 - 7,000
= 48,700
G.P = 1/3 on sales = 1/2 on cost
= 1/2(48,700)
G.P = 24,350
ICAI, 2012

To Opening Stock
To Purchases 45600
(-)Advertisement

900

To Freight Inward
To Gross Profit

Trading A/c

8,000 By Sales

44,700 By Closing Stock

3,000
24,350
80,050

73,050
7,000

80,050

38

ICAI, 2012

Sundry Debtors A/c

To Opening
16,000 By Cash
58,500
balance
By Discount
1,500
To Sundry Creditors 400 By Bills Receivables 10,000
To Credit Sales
73,050 By Bal c/d
19,450
4,27,500

ICAI, 2012

4,27,500

(g)Provide 2.5% for doubtful debts

on Closing Debtors.
Provision for Bad Debts

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= 19,450 * 2.5 %
=
486.25

Rs.486

( Provision for Bad Debts will be

Debited to P&L a/c & Deducted from the Closing
Debtors in the Closing Balance Sheet )

Provision for Bad Debts will not

appear in Sundry Debtors a/c because they are
calculated on Closing Balance of Sundry Debtors
as they are only anticipated losses and not actual
losses.
ICAI, 2012

Profit & Loss A/c

To Expenses
14,200 By Gross
24,350
To Discount allowed 1,500
Profit b/d
To Discounting of Bills 125 By Discount
Received
800
To Advertisement
900 By Interest Receivable
2
To Provision for Bad
By misc. Receipts
500
Debts
486
To Net profit c/d
7,791
42

ICAI, 2012

25,652

25,652

B/s of Rashid as on 31.12.97

Capital
18,800
(-)Drawings(7,000)
(+)Profit
7791
(-)Drawings (904)

S. Creditor
Unpaid Expenses

ICAI, 2012

S. Debtor 19450
(-)Provision 486
Furniture
7000
18,687 (-)depreciation 650
Stock
Prepaid Expenses
Cash
15,000 Bills Receivables
1,800 4% Investment
96
(+)[Link] 2
35,487

18,964

6,350
7,000
700
625
1,750
98
35,487
43

Summary
This is a very comprehensive sum with some
beautiful adjustments .
Students practising it can indeed master Single
Entry.

ICAI, 2012

THANK YOU
45