Unit – 3
Single Entry System
Many small business entities don’t find time to prepare a full set of accounting system under Double Entry System of Book Keeping. They record partial books of accounts to find out the financial position of the business.
It is a system of book keeping in which only Cash A/c and various Personal A/c are prepared is known as Single Entry System of Book Keeping.
In this system, Real Accounts and Nominal Accounts are not prepared. Only Cash A/c and accounts of Debtors and Creditors are prepared.
A Statement of Profit or Loss is prepared to find the amount of Net Profit or Net Loss. To find the Opening Capital and Closing Capital of the business, Opening Statement of Affairs and Closing Statement of Affairs are prepared, respectively. These statements are just in the form of Balance Sheet, having Liabilities and Assets columns.
Q.1. Following is the Receipts and Payments A/c of Senior Citizens Pune, for the year ended March 31,2018.
Receipts and Payments Account for the year ended 31st March 2018
Receipts | Amount | Amount | Payments | Amount | Amount |
To Balance b/d Cash
To Subscription 2016-17 2017-18
To Donations
To Entrance Fees
To Sale proceeds Of Furniture (Book Value 7,800)
To Interest on Fixed Deposits
To Picnic Receipts
|
9,100 16,400
6,000 90,000 7,500
|
25,500
1,03,500
20,000
10,000
6,500
4,500
15,000
| By Salary 2015-16 2016-17 2017-18
By Fixed Deposit
By Printing and Stationery
By General Expenses
By Travelling Expenses
By Audit Fees
By Medical Check-up Fees
By Picnic Expenses
By Refreshment Expenses
By Office Rent
By Balance c/d Cash Bank |
500 8,000
2,365
|
66,500
50,000
13,850
1,500
12,300
1,350
4,050
11,500
1,585
5,000
17,365
|
1,85,000 | 1,85,000 |
You are given the following additional information:
1) Office Rent includes 500 paid for 2016-17 and 1000 for 2018-19. Outstanding Office Rent for current year 2,500.
2) 50% of Entrance Fees are to be capitalised.
3) Outstanding Subscription 10,000.
4) The bill for paper and periodicals 7,150 is outstanding.
Part II – SINGLE ENTRY SYSTEM
PROFORMA:
PARTICULARS | AMOUNT | AMOUNT |
Capital at the end of the year ADD: Drawings during the year In Cash
LESS: Additional Capital introduced during the year
ADJUSTED CLOSING CAPITAL
LESS: Capital at the beginning of the year
PROFIT OR LOSS BEFORE ADJUSTMENTS ADD: Income and Gains during the year Interest on Drawings Prepaid Expenses Undervaluation of Assets Overvaluation of Liabilities
LESS: Expenses and Losses during the year Interest on Capital Outstanding Expenses Overvaluation of Assets Undervaluation of Liabilities Interest paid on Loan taken Depreciation on Assets Bad Debts Reserve for Bad and Doubtful Debts Income paid in Advance
NET PROFIT OR LOSS FOR THE YEAR |
Xx Xx
Xx Xx Xx Xx
Xx Xx Xx Xx Xx Xx Xx Xx Xx
|
XXXX
Xx Xx
Xxx
Xx
Xxx
Xxx
Xxx
XXXX |
Important Note For Students:If in the question, Opening and Closing Capital are not given in the question directly, then its calculation can be done by preparing a Statement of Affairs (Balance Sheet). The total of the Liabilities column will be less than that of the Assets side. This balancing amount represents the amount of the Capital. (Refer Solved Questions)
Q1) Mrs.Ankita keeps her book under Single Entry System and gives the following information:
Particulars | 01-04-2011
| 31-03-2012 |
Investments | - | 12,000 |
Bank Overdraft | - | 10,000 |
Bills Payable | 5,000 | 8,000 |
Creditors | 26,500 | 31,500 |
Furniture | 9,000 | 19,000 |
Debtors | 35,000 | 50,000 |
Stock in Trade | 15,000 | 19,000 |
Bank Balance | 18,000 | 28,000 |
Mrs. Ankita withdrew 4,000 for her personal use. She received 15,000 from her father as gift, which she brought into the business.Additional furniture was purchased on 1st October 2011. Depreciate furniture by 10% p.a.Write off 1,000 as bad debts and provide 5% R.D.D. On debtors.
Find the profit or loss of her business for the year ended 31st March, 2012.
Solution: Opening and Closing Statement of Affairs for the year ended …
Liabilities | 1.4.2011 | 31.3.2012 | Assets | 1.4.2011 | 31.3.2012 |
Bank Overdraft Bills Payable Creditors
Capital (Bal.Fig.) | - 5,000 26,500
45,500
77,000 | 10,000 8,000 31,500
78,500
1,28,000
| Furniture Investments Debtors Stock in Trade Bank Balance | 9,000 - 35,000 15,000 18,000
77,000 | 19,000 12,000 50,000 19,000 28,000
1,28,000
|
Statement of Profit or Loss for the year ended on 31.03.2012
PARTICULARS | AMOUNT | AMOUNT |
Capital at the end of the year ADD: Drawings during the year In Cash
LESS: Additional Capital introduced during the year
ADJUSTED CLOSING CAPITAL
LESS: Capital at the beginning of the year
PROFIT OR LOSS BEFORE ADJUSTMENTS
ADD: Income and Gains during the year
LESS: Expenses and Losses during the year Depreciation on Assets Bad Debts
NET PROFIT OR LOSS FOR THE YEAR |
4,000
1,400 1,000 2,450
| 78,500
4,000 82,500 15,000
67,500
45,500
22,000
NIL
17,150 |
Q2) Miss Kavita commenced her business with a capital of 1,30,000 on 1st April 2010. Her financial position was as follows as on 31st March 2011: Cash 9,120; Stock 10,250; Bills Payable 12,880; Creditors 17,180; Debtors 31,550; Bills Receivable 29,120; Premises 85,750; Vehicles 40,250.
Additional information:
1 She brought additional capital 20,000 on 30th Sept.2010. Interest on capital is to be provided at 5% p.a.
2 She withdrew 10,000 for personal use on which interest is to be charged at 6% p.a.
3 R.D.D. Is to be provided at 2.5% p.a. After providing Bad Debts 1,000.
4 Depreciate Vehicles at 2% and Premises at 4%.
Solution: Closing Statement of Affairs as on 31st March, 2011
Liabilities | 31.3.2011 | Assets | 31.3.2011 |
Bills Payable Creditors
Capital (Bal. Fig.) | 12,880 17,180
1,75,980
| Cash Stock Debtors Bills Receivable Premises Vehicles | 9,120 10,250 31,550 29,120 85,750 40,250 2,06,040 |
Statement of Profit or Loss for the year ended on 31.03.2011
PARTICULARS | AMOUNT | AMOUNT |
Capital at the end of the year ADD: Drawings during the year In Cash
LESS: Additional Capital introduced during the year
ADJUSTED CLOSING CAPITAL
LESS: Capital at the beginning of the year
PROFIT OR LOSS BEFORE ADJUSTMENTS
ADD: Income and Gains during the year
LESS: Expenses and Losses during the year Interest on Capital Depreciation on Assets Bad Debts
NET PROFIT OR LOSS FOR THE YEAR |
10,000 NIL
7,000 4,235 1,000
| 1,75,980
1,85,980 20,000
1,65,980
1,30,000
35,980
300 36,280
12,999
23,281 |
Q3) Mr.Govind keeps his books on Single Entry System and disclosed the following information of his business.
Particulars | 01-04-2010 | 31-3-2011 |
Investments | - | 30,000 |
Bills Payable | - | 18,000 |
Creditors | 52,500 | 69,000 |
Furniture | 15,000 | 15,000 |
Debtors | 60,000 | 90,000 |
Stock in Trade | 30,000 | 37,500 |
Cash at Bank | 36,000 | 54,000 |
Additional information:
1 Mr.Govind transferred 300 per month during first half year and 200 each month for the remaining period from his business to his personal account. He also took goods of 700 for private use.
2 Mr.Govind sold his personal asset for 7,000 and brought the proceeds into his business.
3 Furniture to be depreciated by 10%.
4 Provide R.D.D. 5% on Debtors.
Prepare: Opening and Closing Statement of Affairs and Statement of Profit or Loss for the year ended 31st March 2011.
Solution: Opening & Closing Statement of Affairs as on ………
Liabilities | 1.4.2010 | 31.3.2011 | Assets | 1.4.2010 | 31.3.2011 |
Bills Payable Creditors
Capital (Bal. Fig.)
| - 52,500
88,500
| 18,000 69,000
1,39,500
| Investments Furniture Debtors Stock in Trade Cash at Bank | - 15,000 60,000 30,000 36,000
| 30,000 15,000 90,000 37,500 54,000
|
1,41,000 | 2,26,500 | 1,41,000 | 2,26,500 |
Statement of Profit or Loss for the year ended on 31.03.2011
PARTICULARS | AMOUNT | AMOUNT |
Capital at the end of the year ADD: Drawings during the year In Cash
LESS: Additional Capital introduced during the year
ADJUSTED CLOSING CAPITAL
LESS: Capital at the beginning of the year
PROFIT OR LOSS BEFORE ADJUSTMENTS ADD: Income and Gains during the year
LESS: Expenses and Losses during the year Depreciation
NET PROFIT OR LOSS FOR THE YEAR |
3,000
1,500 4,500 | 1,39,500
3,700 1,43,200 7,000
1,36,200
88,500
47,700 NIL
41,700 |
Q4) Asha and Usha were partners sharing and losses in the ratio 2:1. Prepare their Statement of Profit or Loss for the year ended 31st March 2012 from the following Statement of Affairs as on 31st March 2011.
Liabilities
| Amount | Assets | Amount |
Creditors Bills Payable Capital: Asha Usha
| 33,000 9,000
62,000 32,000
1,36,000 | Cash at Bank Cash in Hand Building Machinery Furniture Stock Debtors Bills Receivable | 6,000 2,000 41,000 21,000 10,000 18,000 25,000 13,000
|
1,36,000 |
The assets and liabilities as on 31st March 2012 were:
Sundry creditors 35,000, Bills Receivable 18,000, Bills Payable 15,000, Cash in Hand 3,000, Stock 32,000, Cash at Bank 6,000, Debtors 38,000. There were no changes in Fixed Assets. Additional Information are as follows:
1 Asha and Usha had drawn 10,000 and 8,000 respectively for personal use.
2 They also brought additional capital of 6,000 and 4,000 respectively.
3 Building to be depreciated by 5% and machinery and furniture at 10%.
4 Charge interest at 10% p.a. On opening capitals and interest on drawings of Asha and Usha were 700 and 500 respectively.
Solution: Statement of Affairs as on 31st March, 2011
Liabilities
| Amount | Assets | Amount |
Creditors Bills Payable Capital: Asha Usha
| 35,000 15,000
79,333 39,667
1,69,000 | Cash at Bank Cash in Hand Building Machinery Furniture Stock Debtors Bills Receivable | 6,000 3,000 41,000 21,000 10,000 32,000 38,000 18,000
|
1,69,000 |
Statement of Profit or Loss for the year ended on 31.03.2012
PARTICULARS | AMOUNT | AMOUNT |
Capital at the end of the year ADD: Drawings during the year In Cash Asha Usha
LESS: Additional Capital introduced during the year Asha Usha
ADJUSTED CLOSING CAPITAL
LESS: Capital at the beginning of the year
PROFIT OR LOSS BEFORE ADJUSTMENTS ADD: Income and Gains during the year Interest on Drawings Asha Usha
LESS: Expenses and Losses during the year Interest on Capital Asha Usha Depreciation on Assets
NET PROFIT OR LOSS FOR THE YEAR |
10,000 8,000
6,000 4,000
700
6,200
| 1,19,000
18,000
1,37,000
10,000
1,27,000
94,000
33,000
1,200
34,200
9,400 5,150
19,650 |
Q5) Mrs.Riddhi keeps her books on Single Entry System and following information were disclosed from it:
Particulars | 01-04-2012
| 31-03-2013 |
Furniture Debtors Stock Cash Bills Payable Sundry Creditors Loan from Bank Investments | 15,000 30,000 30,000 36,000 - 26,250 - - | 15,000 45,000 37,500 54,000 18,000 31,500 5,000 30,000 |
Mrs.Riddhi withdraws 250 each month during the half of the year and 200 each month during the second half of the year from her business for personal use.
She also took away 500 worth of goods for personal use.
Furniture to be depreciated by 5% and provide R.D.D. Of 3% on debtors.
She sold her personal asset for 35,000 and sale proceeds were introduced in business. Interest on investment receivable amounted 3,000 and Interest on loan payable amounted to 250.
Prepare Opening and Closing Statement of Affairs and also prepare Statement of Profit and Loss for the year ended on 31st March 2013.
Solution: Opening & Closing Statement of Affairs as on …
Liabilities | 1.4.2012 | 31.3.2013 | Assets | 1.4.2012 | 31.3.2013 |
Bills Payable Sundry Creditors Loan from Bank
Capital (Balancing Figure) | - 26,250 -
84,750
| 18,000 31,500 5,000
1,27,000
| Furniture Debtors Stock Cash Investments | 15,000 30,000 30,000 36,000 -
| 15,000 45,000 37,500 54,000 30,000
|
1,11,000 | 1,81,500 | 1,11,000 | 1,81,500 |
Statement of Profit or Loss for the year ended on 31.03.2013
PARTICULARS | AMOUNT | AMOUNT |
Capital at the end of the year ADD: Drawings during the year In Cash
LESS: Additional Capital introduced during the year
ADJUSTED CLOSING CAPITAL
LESS: Capital at the beginning of the year
PROFIT OR LOSS BEFORE ADJUSTMENTS
ADD: Income and Gains during the year
LESS: Expenses and Losses during the year: Interest paid on Loan taken Depreciation on Assets
NET PROFIT OR LOSS FOR THE YEAR |
2,700 500
250 750
| 1,27,000
1,30,200 35,000
95,200
84,750
10,450
3,000 13,450
2,350
11,100 |
Books Recommended :
1. J. R. Batliboi —Advanced Accounts
2. M. C. Shukla —Advanced Accounts
3. S. M. Shukla —Advanced Accounts
4. Pickles —Advanced Accounts
5. N. K. Jha —Basic Financial Accounting
6. S. K. Singh & R.U. Singh —Financial Accounting
