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SubjectFree lesson

SINGLE ENTRY AND INCOMPLETE RECORDS

ClassNotes Team 4 MIN READUPDATED 9 JUL 2026

Financial Accounting SSS2 Third Term

WEEK – ONE - THREE

SINGLE ENTRY AND INCOMPLETE RECORDS

CONTENT

TOPIC: SINGLE ENTRY AND INCOMPLETE RECORDS
 

CONTENT: (i) Introduction (ii) Steps Involved in preparing a P&L A/C and Balance Sheet from Incomplete Records (iii) Example

i. INTRODUCTION:

Most businesses keep records of receipts and payments. The records may consist of bank paying – in – book counterfoils, cheque book counterfoils and bank statements in addition to supplies invoices and copies of sales invoices. From these records it may be possible to prepare a P&L A/C and Balance Sheet.

ii STEPS INVOLVED IN PREPARING A P&L A/C AND BALANCE SHEET FROM INCOMPLETE RECORDS; - The necessary steps are as follows: -

Step 1: Preparing an opening statement of affairs (so as to obtain opening capital)

Step 2: Prepare a receipt and payments A/C

Step 3: Prepare control A/CS for debtors and creditors, if necessary to calculate sales    and purchases. It is the sales and purchase figure that will be required to make the account balance.

Step 4: Adjust the receipts and payments accounts prepayments and accruals at beginning and end of the period.

Step 5: Calculate provisions for doubtful debts, depreciation and any other matters not mentioned above.

Step 6: Prepare the P&L A/C and Balance Sheet from the information now available

Example:

The only record that Azim has kept for his business are bank pay-in-book, counterfoils, cheque book counterfoils and records of debtors and creditors. With these it is possible to summarize his transactions with the bank in the year ended 31/12/03 as follows taking paid into the bank: N8000

Cheques drawn: Payment to suppliers N2430, rent N600, electricity N320, postage and stationeries N80, purchase of shop fittings N480, cheques drawn for personal expenses N2700.

Azim banked all his taking after paying the following in cash: -

Creditor for supplies N400 and sundry expenses N115.

Azim estimated his assets and liabilities at 1st January, 2003 to be: shop fittings N1600. Stock N1960, debtors N240 rent prepaid N80. Bank balance N1500, cash in hand N 50, creditors for goods N420; electricity owing N130.

At 31st December, 2003 Azim listed his assets and liabilities as follows. Shop fittings N1800; stock N1520; debtors N380 rent repaired N50; bank balance N2640; cash in hand N 50; creditors for goods N390; electricity owing N225.

Required prepar Azim’s profit and loss accounts for the year ended 31 December, 2003 and his Balance Sheet at that date.

Solution:

Step 1: Opening statement of Affairs

                                                               N                         N

Assets                                                                                        

Shop fittings                                                                       1600

Stock                                                                                  1960

Debtors                                                                              240

Rent prepaid                                                                       80

Bank                                                                                   1500

Cash in hand                                                                          50

                                                                                         5,430

Less Liabilities

Creditors for goods 420

Electricity owing      130                             550­­        

CAPITAL AT 1ST JAN. 2003                      4,880

Step 2: Receipts and payments Account. This includes only those amounts actually received and spent. It is a cash book summary with columns for cash and bank.

SINGLE ENTRY AND INCOMPLETE RECORDS

SINGLE ENTRY AND INCOMPLETE RECORDS

Step 6:                                 AZIM

SINGLE ENTRY AND INCOMPLETE RECORDS

CURRENT ASSETS

SINGLE ENTRY AND INCOMPLETE RECORDS

LESS CURRENT LIABILITIES

     SINGLE ENTRY AND INCOMPLETE RECORDS

EVALUATION QUESTIONS

1.      What is the purpose of the opening statement of affairs in complete records?

2.      What is the debtors control account prepared to reveal?

         READING ASSIGNMENT

1.      Essential Financial Accounting by O.A. Longe  Page 371 - 384

2.      Accounting by Harold Randall  Page 279 – 290

WEEKEND ASSIGNMENT

  1. Debtors control account reveals (a) debtors (b) creditors (c) cash received (d)sales
  2. In incomplete records creditors control account is prepared to reveal (a) sundry creditors (b) purchases (c) cash paid to creditors (d) discount received
  3. In adjustment accounts prepaid rent A/C should have _______ balance (a) credit (b) Debit (c) both debit and credit  (d) either debit or credits
  4. In adjusting for final account, accrued wages should have ______ balance (a) debit (b) credit (c) debit and credit (d) debit or credit
  5. Calculation of provisions for doubtful debts, depreciation, etc is done in step ____ in other to prepare P&L a/c and balance sheet from incomplete records  (a) 1 (b) 2 (c) 5 (d) 6

Theory

1.      List and explain the six steps necessary to prepare a P&L a/c and balance sheet from incomplete records.

2.      Prepare debtors and creditors control accounts formats and highlight what each of them reveals.

GENERAL EVALUATION QUESTIONS

  1. State three characteristics of  single entry accounting system
  2. List four disadvantages of single entry accounting system
  3. List five steps of converting single entry accounting system to double entry system
  4. Explain five differences between a trial balance and a balance sheet
  5. State eight items that will cause a disagreement between the Cash Book balance and the Bank Statement balance