FAC 1502 Incomplete records Incomplete records do not

FAC 1502 Incomplete records

Incomplete records: �do not adhere to the double entry system �know very little about basic bookkeeping principles �minimal accounting records are kept �the single entry system of accounting, leads to incomplete records

Incomplete records: Exercise L Lennon is running a small business from home. He knows nothing about bookkeeping, and just uses a notebook to record amounts payable and amounts receivable. He asks for your assistance in calculating his profit for the year. After thorough investigation you establish the following: Balances as at 30 April: Loan: Y Yoko Equipment Inventory Debtors Bank (favourable) Creditors 20. 1 R 30 000 40 000 21 500 5 000 3 900 6 600 20. 2 R 30 000 40 000 18 700 6 100 2 400 7 300 Additional information: 1 The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2 Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3 The equipment must be depreciated by R 10 000 for the year. 4 During the year, L Lennon took R 36 00 for own use. Required: Calculate the profit or loss of L Lennon for the year ended 30 April 20. 1 3

Incomplete Balance records: s: 30 April 20. 1 R 1 May 20. 0 R Loan: Y Yoko 30 000 Equipment 40 000 Inventory 21 500 18 700 Debtors 5 000 6 100 Bank (favourable) 3 900 2 400 Creditors 6 600 7 300 EQUITY one EQUITY 30 000

The financial position (Net asset value) �Net asset value is the difference between: Øthe value of assets owned by an entity and the liabilities it has incurred �Equation: ØASSETS - LIABILITIES = NET ASSET VALUE (EQUITY) �Basic accounting equation (BAE): Ø A=E+L Ø E=A-L & L=A-E

Incomplete Balance records: s: 30 April 20. 1 R 1 May 20. 0 R Loan: Y Yoko 30 000 one 30 000 Equipment 40 000 Inventory 21 500 18 700 Debtors 5 000 6 100 Bank (favourable) 3 900 2 400 Creditors 6 600 7 300 Step 1 Take the list of all assets and liabilities as at the beginning of the financial period (1 May 20. 0). Step 2 Calculate the capital/equity as at the beginning of the period.

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 18 700 Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities R

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 18 700 Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 R Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 18 700 Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 R Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 18 700 Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 R 40 000 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 18 700 Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 R 40 000 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 6100 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 6100 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors 6100 Bank 2 400 Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors 6100 Bank 2 400 Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors 6100 Bank 2 400 Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000 7 300

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 0 Balances: 1 May 20. 0 R Assets R Equipment 40 000 Inventory 18 700 Debtors 6100 Bank 2 400 Loan: Y Yoko 30 000 Equipment Inventory Debtors 6 100 Bank (favourable) 2 400 Creditors 7 300 EQUITY = ASSETS – LIABILITIES = R 67 200 – R 37 300 = R 29 900 Total assets 67 200 Liabilities Loan: Y Yoko Creditors 30 000 7 300 Total liabilities 37 300

Incomplete Balance records: s: 30 April 20. 1 R 1 May 20. 0 R Loan: Y Yoko 30 000 one 30 000 Equipment 40 000 Inventory 21 500 18 700 Debtors 5 000 6 100 Bank (favourable) 3 900 2 400 Creditors 6 600 7 300 Step 1 Take the list of all assets and liabilities as at the end of the financial period (1 May 20. 1). Step 2 Calculate the capital/equity as at the end of the period.

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities R

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 R Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 R Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 R 40 000 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets Equipment Loan: Y Yoko 30 000 Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 R 40 000 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 5 000 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 5 000 Bank Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank 3 900 Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank 3 900 Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank 3 900 Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 Total assets EQUITY = ASSETS – LIABILITIES = = Liabilities Loan: Y Yoko Creditors Total liabilities 30 000 6 600

Incomplete records: L Lennon Statement of assets and liabilities as at 1 May 20. 1 Balances: 1 May 20. 1 R Assets R Equipment 40 000 Inventory 21 500 Debtors 5 000 Bank 3 900 Loan: Y Yoko 30 000 Equipment Inventory Debtors 5 000 Bank (favourable) 3 900 Creditors 6 600 EQUITY = ASSETS – LIABILITIES = R 70 400 – R 36 600 = R 33 800 Total assets 70 400 Liabilities Loan: Y Yoko Creditors 30 000 6 600 Total liabilities 36 600

Incomplete records: As at 1 May 20. 0 EQUITY = ASSETS – LIABILITIES = R 67 200 – R 37 300 = R 29 900 As at 30 April 20. 1 EQUITY = ASSETS – LIABILITIES = R 70 400 – R 36 600 = R 33 800 Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 33 800 (29 900) Estimate profit for the year before adjustments 3 900 Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings (220) Estimated profit for the year

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 33 800 (29 900) Estimate profit for the year before adjustments 3 900 Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings (220) Estimated profit for the year

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900 (220) (4 200)

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900 (220) (4 200)

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900 (220) (4 200) (10 000)

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900 (220) (4 200)

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900 (220) (4 200) (10 000) 36 000

Incomplete records: Additional information: 1. The telephone account of R 220 for April 20. 1 has not yet been taken into account. 2. Interest of 14% per annum payable on the loan from Y Yoko has not yet been taken into account. 3. The equipment must be depreciated by R 10 000 for the year. 4. During the year, L Lennon took R 36 000 for own use. Estimate profit or loss for the year ended 30 April 20. 1 R Equity as at 30 April 20. 1 Equity as at 1 May 20. 0 Estimate profit for the year before adjustments Adjustments: Telephone expense Interest expense (R 30 000 X 14%) Depreciation Drawings Estimated profit for the year 33 800 (29 900) 3 900 (220) (4 200) (10 000) 36 000 25 480