SINGLE ENTRY AND INCOMPLETE RECORDS
PREPARED
BY
FRANCIS MABEDI
SINGLE ENTRY AND INCOMPLETE RECORDS
 Introduction
The
expression “incomplete records” may
be defined as “any accounting records which
fall short of complete double entry”. There
are varying degrees of incompleteness, and
the procedure to be adopted in order to
prepare final accounts must depend upon
the nature of the records and other data
available.
SINGLE ENTRY AND INCOMPLETE RECORDS
 Introduction
When
books of account are kept in such
a manner that double entry principles
are not observed, or are partly used,
then the accounting records are said to
be kept on a single entry basis.
SINGLE ENTRY AND INCOMPLETE RECORDS

Introduction
 The
three main types of incomplete record may be
broadly divided into :
Extreme
cases where no records at all have been
kept of day-to-day transactions.
Strict
single entry
Partial
 These
single entry
are all considered in detail in this study unit.
SINGLE ENTRY AND INCOMPLETE RECORDS

No records maintained
 Such
a situation may be due to neglect on the part
of the trader to keep records, or to the destruction
of the trader’s records due to fire or some similar
cause. In such circumstances, the accounts will
have to be built up from estimates and whatever
records can be found.
SINGLE ENTRY AND INCOMPLETE RECORDS

No records maintained
 Banks
are often able to give not only copy bank
statements, but also returned (used) cheques and
paying-in book vouchers if these have not already
been sent to the trader. Often, however, a
complete set of accounts is impossible to construct;
in such cases the tax authorities often accept the
profit revealed by the previous year’s account as
the deemed profit for the current year also.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method
 The
essential characteristic of this system is that
only personal accounts are kept. The impersonal
aspect of the transactions is left entirely
unrecorded, so that there are no impersonal
accounts in the books of account. Thus credit sales
may be debited to the personal accounts in the
debtors ledger, but no total is credited to the sales
account.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method
 Total
or control accounts are not usually
maintained under this system. Similarly, credit
purchases are credited to personal accounts in the
creditors ledger, but no total is debited to the
purchases account.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method
 As no nominal accounts are recorded, there is no
direct way of preparing final accounts, neither can
the arithmetical accuracy of the entries be proved
by trial balance. Ledger accounts should be
constructed for sales, purchases etc. by looking at
each and every debtors and creditors ledger
account but a much easier and quicker method
(and often time is at a premium in these
situations) exists of arriving at the profit for the
period.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method
 Under
such a system, the profit or loss for the
period is estimated by comparing the capital at the
end of the period with that at the beginning. If the
closing capital exceeds the opening capital then
such excess is considered to be the profit for the
period. Conversely, if the opening capital exceeds
the closing capital, then such excess is considered
to be the loss for the period.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Adjustments
 When
you are comparing the closing and opening
capitals, you must make adjustments in respect of
any additions to or withdrawals of capital during
the period, as such movements of capital cannot
be considered as profits or losses for the period.
This adjustment should be made to the closing
capital before it is compared with the opening
capital for ascertaining the profit or loss.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Adjustments
 This
adjustment will be reflected in the statement
of profit prepared for the period. It is important to
remember that for this purpose ‘capital’
represents the excess of assets over liabilities, i.e.
Fixed assets + Current assets – Current liabilities
– long term liabilities = Capital
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method
 The
examples that follow below illustrate the
principles involved.
Example (a) – No Additions or Withdrawals
MK
Capital at the beginning of the period
1,000
Capital at the end of the period
2,500
Profit for the period
1,500
Capital at the beginning of the period
1,200
Capital at the end of the period
Loss for the period
800
(400)
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method
Example (b) – Additions and withdrawals
Business
A
B
C
D
MK
MK
MK
MK
Opening capital
2,000
4,400 3,200 2,000
Closing capital
4,000
4,000 3,000 2,400
Drawings
800
800
800
Introduction of capital
1,200
400 1,400
The results of the above four businesses as regards profits
or losses are ascertained as follows:
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method (workings - adjustment
of working capitals)
Businesses
A
MK
B
MK
C
MK
D
MK
Closing capital
Add: Drawings
4,000
800
4,800
4,000
800
4,800
Less: Introductions of capital
Adjusted closing capitals
1,200
3,600
400 1,400
4,800 2,600 1,800
3,000 2,400
800
3,000 3,200
Remember that the opening capital of one year is the closing
capital of the previous year before adjustments
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Method – determination of profit or
(loss)
Businesses
Adjusted closing capital
Opening capital
Profit for the period
Loss for the period
A
B
C
D
MK
3,600
2,000
MK
4,800
4,400
MK
2,600
3,200
MK
1,800
2,000
1,600
400
600
200
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
 In practice, to arrive at the opening and closing
capitals, opening and closing statements of affairs
are prepared.
 As we have seen, a statement of affairs means a
summary drawn up in the form of a list or balance
sheet, showing on one side the estimated amount
of various assets and on the other side the
estimated amounts of the various liabilities, the
difference between the two representing the
owner’s capital at the date of the statement.
SINGLE ENTRY AND INCOMPLETE RECORDS
 Strict
single entry – Statements
 As no record of impersonal accounts are kept,
such statements will have to be prepared from
information supplied by owner himself. It should
not be difficult to arrive at the fair estimates of
the values of the assets and liabilities at the end
of the period, provided the work is done as soon
as possible after the end of the period when the
necessary information for reliable estimates is
still available.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements

However, when preparing the opening statement
will naturally be more difficult unless the owner
had prepared a closing statement at the end of the
previous period.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
 As
the records are incomplete and values are
estimated, the resulting statement of profit may
not be reliable and therefore the trader should be
advised to adopt double entry book-keeping as
soon as possible.
 The
following example illustrates the preparation
of such statements of affairs and the
ascertainment of the profit for the period.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
 Mr.
Banda keeps his books on a single entry
principle. As a result of enquires, you are able to
elicit the following information:
Assets and Liabilities
1 Jan 2020
MK
31 Dec 2020
MK
Furniture
Stock (Inventory)
Debtors
10,000
20,000
17,000
20,000
25,000
25,000
Cash
Creditors
1,500
13,000
2,000
19,000
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
 Additional
information
Mr. Banda has drawn MK15,000 on account of his
profits and has introduced a legacy of MK10,000
during the period as additional capital. He wishes to
write the furniture down to MK18,000 and to create a
bad debt provision of 10% of debtors.
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
Statement of affairs as at 1 January 2020
Furniture
Stock (Inventory)
MK
10,000
20,000
Debtors
Cash
Capital
17,000
1,500
MK
35,500
Creditors
48,500
13,000
48,500
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
Statement of affairs as at 31 Dec 2020
Furniture (20,000 – 2,000 depreciation)
MK
18,000
Stock (Inventory)
Debtors (25,000 – 2,500 provision at 10%)
cash
25,000
22,500
2,000
Capital
Creditors
Totals
67,500
MK
48,500
19,000
67,500
SINGLE ENTRY AND INCOMPLETE RECORDS

Strict single entry – Statements
Statement of profit for the year ended 31 December 2020
Balance of capital 31 December 2020
Add: Drawings for the year
MK
48,500
Deduct additional capital
15,000
63,500
10,000
Capital at 1 January 2020
53,500
35,500
Estimated profit for the year
18,000
SINGLE ENTRY AND INCOMPLETE RECORDS

Partial single entry
 As
previously mentioned, strict single entry takes
account only of personal aspect of the transactions
and leaves the impersonal aspect entirely
unrecorded. This is rarely met in practice, as in
almost every case some form of cash records, even
though incomplete, will be kept. Usually there is a
bank account and the statement supplied by the
bank will provide the details of the operation of
that account.
SINGLE ENTRY AND INCOMPLETE RECORDS

Partial single entry
 Wherever
a system goes beyond the keeping of
personal accounts, yet falls short of the system of
double entry, it is still referred to as single entry. A
system cannot be entitled double entry if no trial
balance can be prepared.
SINGLE ENTRY AND INCOMPLETE RECORDS

Conversion of Single to Double Entry
 Conversion of books kept on a single entry basis to a
double entry basis is relatively straightforward as long
as a system of steps is used, as follows:
Prepare a statement of affairs as at the
commencement of the period.
Open ledger accounts (in practice via the journal)
for all items stated in the opening statement of
affairs. Debtors and creditors as stated in the
statement of affairs are posted to the debit and
credit respectively of total debtors and creditors
accounts (as details of individuals are irrelevant)
SINGLE ENTRY AND INCOMPLETE RECORDS

Conversion of Single to Double Entry
 Write
up the cash at bank account and cash in hand
account from information given in the question or
scenario.
 Cash
at bank
Note that either cash drawings or the final cash
balance will be the missing figures.
SINGLE ENTRY AND INCOMPLETE RECORDS

Conversion of Single to Double Entry
 Cash
in hand
Do keep this account separate from cash at bank
(either in columnar cash book, separate column. Or
a separate cash book). Note that either cash
received from sales, cash drawings, stolen cash, or
the final balance will be the missing figure.
SINGLE ENTRY AND INCOMPLETE RECORDS

Conversion of Single to Double Entry
 Complete postings from the two cash accounts (or
columns of the same ledger) to the control accounts
and expense accounts. Note that in a latter case,
accruals and prepayments from the opening statement
of the affairs should have been posted to their
individual ledger accounts, so long as information
permits, in step above and not to the credit or debit
respectively of accruals or prepayments accounts. This
is because individual expense-type details are required
for the final accounts that will result from this
procedures.
SINGLE ENTRY AND INCOMPLETE RECORDS

Conversion of Single to Double Entry
 Prepare
the trial balance and then proceed as for
any normal set of accounts(i.e. list adjustments,
prepare accounts and close the books).
 The
above procedure is illustrated by a
comprehensive example (see on a separate
sheet).
SINGLE ENTRY AND INCOMPLETE RECORDS

Using ratios and percentages
 In
the example that I have illustrated, cash takings
was the only unknown in the cash summary. We
must now consider what happens if there are two
unknowns in the cash summary (say drawings and
takings).
SINGLE ENTRY AND INCOMPLETE RECORDS

Using ratios and percentages
 We can still construct the final accounts, provided
we are given some additional information. One
possibility is the gross profit percentage.
Gross profit percentage = Gross profit x 100
Sales
The percentage provided may have been calculated
by reference to a similar business, or from the
previous year’s results of this business. See the
example on a separate sheet.
SINGLE ENTRY AND INCOMPLETE RECORDS

Variations to ratios/percentages
 You
should not suppose that incomplete records
questions will all be alike. Variations arising could
include:
A
calculation of the stock value lost in the firm.
If records of opening stock, purchases and sales
existed, and the gross profit percentage was
known, the gross profit could be arrived at and
hence the second missing figure, the closing
stock itself.
SINGLE ENTRY AND INCOMPLETE RECORDS

Variations to ratios/percentages
 Sometimes
traders receive rebates from
suppliers. If say this was 2% and amounted to
MK500, this tells us that current purchases
were MK25,000 (100 x 500/2) and, by inserting
this figure in creditors control account, will tell
us cash paid to suppliers, provided opening and
closing stock creditors are known.
SINGLE ENTRY AND INCOMPLETE RECORDS

Variations to ratios/percentages

Bonuses /commissions: often a bonus is given to a
sales manager or bar manager (see later when we
deal with income and expenditure accounts) based
on the net profit. This can be stated in two ways,
which are illustrated on the next slide:
SINGLE ENTRY AND INCOMPLETE RECORDS

Variations to ratios/percentages
 Example
1
 Commission
of 10% of net profit before the
commission is given to a manager. The trading
results are:
MK
Gross profit
200,000
Less : expenses
180,000
Net profit before commission
Less commission
Net profit after commission
Commission is calculated as follows: 20,000 x 10/100 = 2,000
%
20,000
100%
2,000
10%
18,000
90%
SINGLE ENTRY AND INCOMPLETE RECORDS

Variations to ratios/percentages
 Example
2
 Commission
of 10% of net profit after the
commission is given to a manager. The trading
results are:
Using the same trading results
Net profit before commission
Less commission
Net profit after commission
MK
%
20,000
110
1,818
10
18,182
100
The commission is calculated as follows: 20,000 x 10/110 = 1,818
Do read questions thoroughly as regards commission before
beginning your calculations.