Single Entry and
Incomplete Records
Sizwe M Kalipinde
Skalipinde@mca.ac.mw
Introduction
• From your knowledge of the accounting equation, you know that unless
there has been an introduction of extra cash or resources into the firm, the
only way that capital can be increased is by making profits.
• In some cases there may be no any records whatever of the day-to-day
transactions, it is expected that we shall be able to build up accounts largely
from estimates.
• In other instances, books may have been kept by ‘single entry’ or data may be
available by means of which double entry can be constructed.
Identifying Profits when Opening and
Closing Capital are Known
• If you know the capital at the start of a period and the capital at the end of the
period, profit is the figure found by subtracting capital at the start of the period
from that at the end of the period.
• To calculate these missing figure, profit in particular, identify;
1. Net profit
2. Opening Capital Value (previous capital - last year’s capital)
3. Closing Capital Value (current capital – this year’s capital)
4. Drawings
Example 1
With No Drawing
A business had a capital at the end of 20X4 as K20,000. During 20X5 there
have been no drawings, and no extra capital has been brought in by the owner. At the end of 20X5 the capital
was K30,000.
Required:
Calculate the net profit for the business
> First things first, before we start calculating lets identify the elements required to calculate for the missing
figure.
1. Net profit = ??
2. Old Capital = MWK 20,000
3. New Capital = MWK 30,000
4. Drawing = MWK 0
Solution
Net Profit = New Capital – Old Capital
= MWK 30,000 – MWK 20,000
= MWK 10,000
Note: When calculating the figures under this topic, always remember the rules for balancing
up the statement of financial position
Example 2
With Drawings
A business had a capital at the end of 20X4 as K20,000. During 20X5 there
have been drawings worth MWK 7,000 and no extra capital has been brought in by the owner. At the end of
20X5 the capital was K30,000.
Required:
Calculate the net profit for the business
> First things first, before we start calculating lets identify the elements required to calculate for the missing
figure.
1. Net profit = ??
2. Old Capital = MWK 20,000
3. New Capital = MWK 30,000
4. Drawing = MWK 7,000
Solution
This year’s Capital = Last year’s Capital + Profits – Drawings
MWK 30,000 = MWK 20,000 + XX?? – MWK 7,000
MWK 30,000 -20,000 + 7,000 = MWK XX??
MWK 17,000 = XX??
Therefore: Net profit = MWK 17,000
Note: When calculating the figures under this topic, always remember the rules for balancing up the
statement of financial position
Identifying profits when you only have a list
of the opening and closing
assets and liabilities
• This part shows the calculation of profit where insufficient information is
available to draft a trading and profit and loss account (Statement of profit
and loss)
• Next is the example, where information provided is not enough to build up a
statement of profit or loss
Example
source: frank wood
H Taylor has not kept proper bookkeeping records, but she has kept notes in diary for the
transactions of her business. She has provided details of the assets and liabilities as at
31 December 20X5 and 31 December 20X6 as below:
At 31 December 20X5
Assets: Van £6,000; Fixtures £1,800; Stock £3,000; Debtors £4,100; Bank £4,800; Cash £200.
Liabilities: Creditors £1,200; Loan from J Ogden £3,500.
At 31 December 20X6
Assets: Van (after depreciation) £5,000; Fixtures (after depreciation) £1,600; Stock £3,800;
Debtors £6,200; Bank £7,500; Cash £300.
Liabilities: Creditors £1,800; Loan from J Ogden £2,000.
Drawings during 20X6 were £5,200.
Required: Draw the statement of profit or loss for 20X6
