40.

ILLUSTRATIONS

10.1
10.1 FROM FINANCIAL AND
COST
lustration 1: Both Accounts show
ACCOUNTS
The Net Prorit or a Company for the yearProtits)
ended on 31st March 2014 was
ooks. The
Financial Boo Cost Accounts 56,600 as
snow
the

xamination
examination
examination of both the sets of
of acr disclosed
iosed a prof
profitfacts
of 7 59,650 for the same period. On an

Goodwill written off in Financial accounts, the followingving facts were discovered
were discovered
h) Transfer fees received during the Accounts 1,500.
year 7 200.
icl Depreciation charged in financial
d) Depreciation recovered in cost accounts 750.
statements 7 1,000.
e) Opening stock as on 1st April 2013 as
( Opening stock as on 1st April 2013 as per financial
cost
records 13,000.
per statement 12,000.
(a) Closing stock as on 31st March 2014 as
per financial records7 14,000.
(h) Closing stock as on 31st March 2014 as
per cost statement 15,000.
Prepare a Reconciliation statement reconciling the profit as shown
taking (i) Financial profit as the starting point, (ii) Costing by financial and cost books
profit as the starting point.
Solution:
Statement of Reconciliation
Between Financial Profit and Costing Profit For the Year Ending 31-3-2014
Particulars
FINANCIAL PROFIT
Add 56,600
1. Amounts Debited in Financial A/cs only
-

Goodwill written off 1,500

2. Closing Stock Undervalued in Financial A/cs
15,000 - 7 14,000)
1,000
3 Opening Stock Overvalued in Financial A/cs 1.000 3.500
13,000 -7 12,000)
Less: 60,100
Income Credited only in Financial A/cs
Transfer Fees Received 200
Depreciation Undercharged in Financial A/cs ( 1,000 750) 250 450
COSTING PROFIT 59,650
 Statement of Reconciliation
31-3-2014
Financial Profit for the Year Ending
Between Costing and
Particulars

coSTING PROFIT 59,650

Add:
income OCredited in Financial A/cs only
200
- Transfer Fees Received
* **

750) 250 450

2 Depreciation Undercharged in Financial A/cs ( 1,000
60,100
Less
1. Amounts Debited in Financial A/cs only 1,500
- Goodwill written off 1,000
in Financial A/cs
2. Closing Stock Undervalued
15,000 -7 14,00o) 1,000 3,500
Overvalued in Financial A/cs
3. Opening Stock
13,000 7 12,000)
56,600
FINANCIAL PROFIT

llustration 2:(Both Accounts show Losses)

reconciliation and find-out profit/loss as per financial
prepare a statement
of
From the following,
records.

Particulars ***
1,72,400
records
Net loss as per cost **
3,120
under-recovered in costing
Works overhead 1,700
over-recovered in costing
Administrative overheads 11,200
Depreciation in Financial A/c 12,500
Depreciation in Cost A/c 8,750
Interest received ,700
Obsolescence Loss in Financial A/c 40,300
Provision for Income Tax
Opening Stock 52,600
Financial Records 54,000
Cost Records
Closing Stock 52,000
Financial Records 49,600
Cost Records 6,000
Interest charges in Cost Account only 950

Preliminary Expenses w/off adapted)

(T.Y.B.Com., Oct. 2001,
Solution:
Financial Loss
Statement of Reconciliation Between Costing Loss and

Particulars 1,72,400

COSTING LOSS
Add
1. Expenses/Losses/Appropriations Debited in Financial A/c Only
- Obsolescence Loss 5,700
- Provision for Income Tax 40,300
950
Off
-PreliminaryExpenses Written
2. Overheads Under recovered in Cost A/cs 50,070

-WorksOverheads 3.120 2 , 2 2 , 4 7 0

Less
1. Income Credited in Financial A/cs
-Interest Received 8,750
2. Closing Stock Overvalued in Financial A/cs 2,400
3 Opening Stock Undervalued in Financial A/cs 1,400
Kecon

in Financial A/cs
4. Depreciaticjation Under Charged 1,300
in Cost A/cs
ds Over-recovered
O v e r h e a d s

Administrative
Overheads 1,700
A/cs
Debited only in Cost
6. Expenses De
6,000| 21,550
- Interest C h a r g e s

FINANCIAL L O S S
2,00,920

lustration 3 cost accounts for the year ended 31st March 2015
was

nrofit of Dhura Ltd. accountsbyfor the same period was ? 5,00,200

shown
financial

10,3 5,000 and by the financial accounts and the cost accounts
of
revealed the following
facts:

A
tiny of the figures
Scrut

14,800
in cost accounts
Particulars

overhead under recovered 20,000

Administrative o v e r - r e c o v e r e d in cost
accounts
40,000
Factory overhead accounts
over charged in financial 20,000
a Depreciation 24,000
Investment
Interest on accounts
4. absolescence charged in financial 2,00,000
to
6 Loss due labour wastage charged in financial accounts
2,80,000
6. Abnormal
*

4,000
in financial accounts
tax provided
7. Income in financial accounts 28,000
interest credited accounts
8, Bank credited in financial accounts
48,000
adjustment financial
9. Stocks values charged in
due to depreciation in stock June 15, adapted)
10. Loss (ICWA Inter,
Prepare Reconciliation Statement.

Solution: S t a t e m e n t as o n
31-3-2015
Reconciliation

5,00,200
Particulars
ACCOUNTS
FINANCIAL
PROFIT AS PER 14,800
Add recovered 40,000
1. Administration overhead under 24,000
Over recovery of
depreciation
2. considered **
2,00,000b
obsolescence
3. Loss due to 2,80,000
Abnormal labour wastage
**

4. 0006,06.800
5. Income Tax 11,07,000
in Stock
6. Loss due to Depreciation
20,000
Less 20,000
o v e r recovery
.Factory overhead 4,000
72,000
2. Interest on investment
3. Bank Interest
28,000
10,35,000
4. Stock adjustment

PROFIT AS PER COST ACCOUNTTS ended 31st

March,
for the year
Wlustration 4 35,400 as per
their cost
accounts
the s a m e period.
of ? 67,800 for accounts and tinancial
The

showed a net loss of net profit

20 d financial accounts
disclosed a
of the figures
of cost
foll ever, the as a result of scrutiny
normation were revealed
acco
accounts 25,500
1,35,000

Administrative overhead under recovered 26,000

recovered
Factory overhead over
Cost Accounts
20,000
Depreciation under charged in 16,800
4. Dividend received 43,600
Financial Accounts
to obsolescence charged in
OSS due 13,600
8, Income tax provided
Bank interest credited in Financial Accounts
 Cost Accounting (T. Y.B. Com. : SEM-
398
Stock
8. Value of Opening 1,65,000
In Cost Accounts

In Financial Accounts
1,45,000
9. Value of Closing Stock: 1,25,500
In Cost Accounts
In Financial Accounts
1,32,000
written-off in Financial
Accounts 25,000
10. Goodwill
premises charged in Cost Accounts 60,000
11. Notional rent of
own

debts in Financial Accounts 15,000

12. Provision for doubtful base.
statement
a reconciliation
taking costing net loss
by
as
Prepare
(CA-Inter, Nov. 2012, adapted)
Solution
Statement of Reconciliation

Particulars (35,400)
COSTING LOSS
***

Add 1,35,000
recovered
1. Factory Overhead over
20,000
2. Dividend received
3. Bank Interest received
13,600
4. Difference in Value of Opening Stock (1,65,000 1,45,000).. 20,000
5. Difference in Value of Closing Stock (1,32,000 1,25,500) .. ...
6,500|
Notional Rent of own Premises 60.000 2.55,100
2,19,700
Less
1. Administration Overhead under recovered *
***** *** ***
25,500
2. Depreciation under charged 26,000
3. Loss due to Obsolescence 16,800|
Income Tax provided 43,600
Goodwill written-off 25,000
6. Provision for Doubtful Debts 15.000 (1,51,900)
FINANCIAL PROFIT 67,800

llustration 5
GK Ltd. showed net loss of r2,43,300 as per their financial accounts for the year ended 31st March
2018. However, cost accounts disclosed net loss of R 2,48,300 for the same period. On scrutinising
both the set of books of accounts, the following information were revealed :

1. Works overheads over recovered 30,400

20,300
2. Seling overheads under recovered
27,700
Administrative overheads under recovered
35,100
4. Depreciation over charged in cost accounts
15,000
5. Bad debts w/off in financial accounts
5,000
6. Preliminary expenses w/off in financial accounts
7,500
7. Interest credited during the year in financial accounts
Prepare a reconciliation statement reconciling losses shown by the tfinancial and cost accounts
taking costing net loss as base. (CA-Inter, May 2018, adapted)
Solution
Statement of Reconciliation Between Costing Loss and Financial Loss

Particulars
COSTING LOSS (2,48,300)

Add
1. Interest credited during the year in Financial Accounts 7,500
2. Depreciation over charged in Cost Accounts 35,100
3 Works Overheads over recovered 30,40073,000

1.75,300)
 399
R e c o r
ciliation of Cost and.Financial Accounts
Less
Overheads under recoverod (20,300)
Selling
Administra Overhead under recovered (27,700)
Bad Debts w/off in Financial Accounts (15,0000)
2 Exper w/off in Financial Accounts (5,000) (68,000)
Preliminary
4.
FINANCIAL LOSS 2,43,300)

10. FROM coSTING PROFIT FIGURES

Mlustration 6
folowing information is available from Cost and Financial Accounts in respect of Progressive
r the year ended 31st December, 2013. You are required to prepare a statement reconciling
Co. Ltd. for re
Coarofit or loss from the same. The following items are shown in Financial Accounts but not in C o
he
ACcounts.

Particulars

obsolescence of assets 3,700

Loss
due to ** **' *** ** *'*

Provision for income-tax

**** * * **
*** 38,000
in value of stock 6,000
Reduction **

Debenture interest 4,000

LOSS by fire 1,050
Interest o n i n v e s t m e n t s ** 6,000
interest and transfer fees 1,225
Bank
Rent received
staff quarters
of 2,000
is follows
The additional information as

al In Cost Accounts, works overheads are estimated at 7 26,000, while in Financial Accounts they
are charged at 7 29,120.
b) In Cost Accounts, administration overheads are estimated at 7 20,000, while in financial accounts
theyare debited at 18,300.
c) In Cost Accounts, excess charge for depreciation is 1,300 compared to Financial Accounts.
d) Profit as shown by Financial Accounts does not agree with the profit shown by Cost Accounts.
Profit as per Cost Accounts is 1,72,400.
Solution:
PROGRESSIVE Co. LTD.
Statement of Reconciliation Between Costing Profit and Financial Profit

Particulars
cOSTING PROFIT 1,72,40o
Add:
1.
Income Credited in Financial A/cs only
Interest on Investments 6,000
Bank Interest& Transfer Fees
Rent Received
1,225
2,000
Depreciation Undercharged in Financial A/cs 1,300
(e. overcharged in Cost A/cs)
.
Overheads Over recovered in Cost A/cs
Administration Overheads R 20,000 18,300) 1,700 12,225

Less: 1,84,625
Expenses/Losses/Appropriations Debited in Financial A/cs Only
Loss due to obsolescence of assets 3,700
Provision for Income Tax 38,000
Reduction in Value of stock 6,000
Debenture Interest 4,000
. Loss by Fire
verheads Under 1,050
recovered in Cost A/cs
Works Overheads ( 29,120 7 26,000)
NANCIAL PROFIT 3,12055,870
1,28,755
*** ** **
 10.3 FROM FINANCIAL PROFIT FIGURES

lustration 7:
Fromthe following particulars. prepare Reconciliation Statement and Ascertain Costing Profit .
NetProfit as per &
financial P LAc. 50,000, R
wasOpening Stock
Accounts as compared to financial accounts. Administrative overheads charged in Financial Cost
overvalued by 2,0008
20,000 but recovered in Cost 40,000. Books
Income Tax Provision7 1,200.
Notional Salary of Proprietor in Cost 20,00o.
Interest Received 12.000.
Closing Stock as perfinancial books 16,200.
Whereas in Cost books it was 19,000.
Solution
(T.Y.B.Com., March 2005, adapted)

Statement of Reconciliation

Particulars
FINANCIAL PROFIT
Add 50,000
1. Income Tax Provision (only in FA)
2. Difference in Closing Stock
* **" 1,200
2,800
Less
54,000
1.
2
Opening Stock Overvalued ** *** ** * **
2,000
Administration Expenses Overabsorbed ***

20,000|
3. Notional Salary (only in CA) 20,000
4. Interest Received (only in FA) 12,000 54,000
CoSTING PROFIT NIL
llustration 8
From the following, prepare Reconciliation Statement of M/s. XYZ and Company as on 30-6-2014:
(1) Net Profit as per Financial Accounts 40,340.
(2) Income Tax Provision made 30,000.
(3) Materials Purchases of 5,000 units were recordedin cost at standard cost 24 per unit whereas
in Finance it was recorded at actual cost 22 per unit.
(4) Old Bad debts recovered 20,500.
(5) Loss on sale of furniture was 4,120. (T.Y.B.Com, Oct. 2006, SYBAF Oct. 2014, adapted)
Solution
Statement of Reconciliation of Profits

Particulars
FINANCIAL PROFIT 40,340
Add
1. Income Tax Provision not recorded in cost books
30,000
2. Loss on Sale of Furniture not included in Cost Sheet 4,120 34,120
74,460
Less
1. Old Bad Debt recovered recorded in Financial Books only ... .. 20,500
2. Material purchased overcharged in cost books 10,000(30,500)
COSTING PROFIT 43,960

llustration 9
From the following information you are required to prepare a statement reçonciling the resu of

Cost Books
Particulars
Books
Net profit as per Financial
51,052

in cost book 1,001

Works overheads under recovery * * '
 onciliation of Costand
Financial
reciation charged in Financial Accounts
eciation charged in Cost Books
olescence loss
ne-tax provided in
harged inBook
Financial 401
notFinancial Books
st received but
Books Only
recorded in Costonly
nteres

13,000
Bank.
interest debited in Financial Books Book 14,326
solution: only 2,021
,626
statement of Reconciliation 3,031
Particulars Between Financlal (SYBAF, Oct. 2018, 292
Profit and
FINANCIAL PROFIT Costing Profit adapted)
Add
verheads under
Works overhead recovered in Cost A/cs
51,052
ynenses/LoSses/Appropriations Debited
Expe
Obsolescence loss
- Income tax in
Financial A/cs only 1,001
Bank Interest
* ** ** ** ***
2,021
2,626
Less 292 5,940
Depreciation Undercharged in Financial
2Income credited 56,992
Interest income
in
Financial A/cs only A/cs ( 14,326 -7 13,000)
1,326
cOSTING PROFIT 3,031
lustration 10 ,357
The net profit of a company 52,635
is financial records. The amounted to
cost records, 60,412 for the year ending 31st
accounts disclosed the December, 2013 as per
following facts revealed a different figure. A scrutiny
a) Works overhead recovered of the two sets
in Cost of
actual amount of Accounts during the
these expenses was 21,390
D) Actual office expenses
period amounted to 28,450 while
for the only. the
Cost Accounts amounted period were 19,850, whereas the
to 14,500. office overhead
c) The annual rental value of
recovered in
in Cost Accounts premises
owned
but not in Financial by the company
d)Selling and distribution Accounts. amounting to 10,800 was charged
cOsting records. expenses for the period
amounting to 16,490 were excluded from
e) Excess depreciation charged in Cost
Expenses not included in Cost AccountsAccounts 2,400.
Interest on Loan and shown in Financial Accounts
Bank Charges 1,600
Director's Fees 160
Penalty due to late completion of contract 750
0) Gains during the 2,500
year not included in Cost
Transfer fees Accounts
Profit on sale of 5
investment 4,250
Interest on investment
h) The 9,450
following
above. appropriation had been made before
arriving at the profit figure of 60,412, shown
ransfer to Dividend Equalisation Fund 10,500
ransfer to Income Tax Reserve 6,400
ransfer to Debenture Redemption Fund 9,000
roft 10,000 given as donation to the Prime Minister's Relief Fund had been charged to
rofit and Loss
Ccount as business expense.
are a Reconci
onciliation Statement and find the amount of net profitloss as per the costing records.
 Cost Accounting (1. YB.Com. :
402 SEM-V)
Solution
Statement of Reconciliation

Profit For the Year Ending 31-12-201a

Between Financial Profit and Costing

Particulars
FINANCIAL PROFIT
60,412
Add:Expenses/Losses /Appropriations Debited in Financial A/cs only
1.
Expenses
- Selling and Distribution expenses ***** ****
16,490
Intereston bank loan * ** ***
1,600
Bank charges **** *** 160
Director's fees * 750
Penalty on contract 2,500
Appropriations
-Dividend equalisation fund 10,500
Incometax reserve 6,400
Debenture redemption fund 9,000
Donations toPrime Minister's Relief Fund 10,000
2. Overheads under recovered in Cost A/cs
Office Overheads ( 19,850 -7 14,500)
5.350 62,750
Less: 1,23,162
1. Income Credited in Financial A/cs only
- Transfer fees
45
-

Profit on sale of investments

4,250
Interest on investments 9,450
2. Depreciation Under-charged in Financial A/cs
2,400
(i.e. Overcharged in Cost A/cs)
3. Overheads Over recovered in Cost A/cs
7,060
- Works Overheads F 28,450 721,390)
Expenses Debited in Cost A/cs only
-Rentfor own premises
CoSTING PROFIT
***" *** *** ***

10.800 34,005
89,157
10.4 FROM P &LA/C +COST PROFIT FIGURE
lustration 11
A Firm's Trading and Profit and Loss Account is as follows:
Particulars
Particulars
Purchase 37,815
Less: Closing Stock Sales 75,000 Units
6,120| 31,695 @7 1.50 each 1,12,500
Wages [Direct 15,750 Profit on Sale of Machinery
Works Expenses 3,900
18,195
Seling Expenses 10,650|
Administration Expenses
8,010
Depreciation 1,650
Net Profit
30,450
1,16,400 1,16,400
The Profit as per Cost Accounts
was 29,655.
Profit with Financial Profis. Funher intormation Prepare Reconciliation Statement to reconcile st
as per Cost
(a) Closing Stock was taken at 6,420. Accounts:
(b) The Works Expenses were taken at 100% of Direct Wages
(c) Selling and Administration EPses were charged at
10% of sales and at 0.10 per
respectively.
taken at 1,200.
(d) Depreciation was
 nancia
cial Accounts
Solurion

nent
Statement of
Reconcllatlon Between Financlal 403

antCulars
Proft and
MANCIAL PROFIT Costing Profit
Add:

losing Stock Undervalu in

R6,420 R 6,120) Financlal A/cs 30,450

1,650-
oreciation
1,200)
vercharged in
Financial A/cs 300
OverheadsUnder recovered in
Cost A/cs 450
Works xpenses ( 8,195-7
15,750)
Admn. Expenses (? 8,010- 7,500)
2,445
LeSS
510 3,705
Income Credited in Financial A/cs only 34,155
Profit on Sale of
Machinery
Overheads Over recovered in Cost A/cs
Selling Expenses (? 11,250 -7 3,900
10,650)
COSTING PROFIT
600 ,500
Astration 12:(Factory OH as Bal. Fig. in **
29,655
Costing P &L
bllowing Profit and Loss Account of M/s. Anubhav A/c)
Fol is the
ended 31st December, 2013.
Manufacturing Company for the year
Particulars
To Opening stock of Particulars
Raw Materials By Sales
Work in Process 60,000 By Closing Stock: 9,20,000
Finished Goods
35,000 Raw Materials
80.000 1,75,000 60,000
To Purchases Work in Process 41,000
To Factory Wages 2,40,000 Finished goods
To Electricity Charges 60,000 30.0001,31,000
To Factory Overheads 66,000
To Gross Profit c/d 90,000
4,20,000

To Administrative Expenses
|10,51,000 10,51,000
To Selling and Distr. 25,000 By Gross Profit b/d 4,20,000
To Bad debts Expenses 1,15,000 By Miscellaneous Income 20,000
To Net Profit 30,000
2,70,000
otal
4,40,000 Total 4,40,000
neir Cost Account showed a profit of 2,81,750. On scrutiny of their Costing Profit and Loss
ACCOunt, it was found that
Iheir Opening Stocks and Closing stocks were valued as under
Opening stock of Closing stock of
Raw materials 80,000 Raw Materials 70,000
Work in Process 740,000 Work in Process 44,000
Finished Goods 60,000 Finished Goods 20,000
hey charged administrative expenses at 18,000 and Selling and distribution expenses at
1,27,000.
ney had charged depreciation 25% on Written Down Value Method on its plant which was
urchased on 1st July 2010 for 80,000. In Financial accounts, however, the depreciation was
rOvided on Straight Line Method and the same was included in the Factory overheads of
0,000. Prepare a statement reconcling the difference in the profits as disclosed by the two
records.
404
:SEM-V)
Solution MANUFACTURING COMPANY
M/S ANUBHAV
Reconciliation for the Year Ending 31-12-2013
Statement of

Particulars
COSTING PROFIT
* **
2,81,750
Add:
Misc. Income credited only
in F.A. * **
20,000
1.
overvalued in F.A.
2. Closing Stock
- Finished goods (30,000 20,000) 10,000
Stocks undervalued in F.A.
3. Opening
- Raw Materials (80,000 60,000) 20,000
Work-in-Process (40,000 35,000) 5,000
-Selling&Distr. Exp. Over-recovered in C.A. (1,27,000 1,15,000)
4. 12.000 67,000
3,48,750
Less
1. Bad debts w/off F.A.
only in * **
30,000
Opening stock overvalued in F.A.
- Finished goods (80,000 60,000) 20,000
3. Closing stock undervalued in F.A.
- Raw materials (70,000 60,000) 10,000
- Work-in-process (44,000 41,000) 3,000
Depreciation overcharged in F.A. (20,000 - 9,844)
4. 10,156
5. Overheads under recovered in C.A.
Administrative expenses (25,000 18,000) 7.00080.156
2,68,594
Add: Factory Overheads [71,406 (90,000 20,000)] (WN 3) . 1,406

FINANCIALPROFIT 2,70.000
Notes
(1) Depreciation as per P& LA/c: 80,000 x 25% = 20,000
(2) Depreciation as per Cost Accounts (C.A.):
1-7-2010 Machine purchased 80,000
31-12-2010 Depreciation 25% (for 6 months) 10,000
1-1-2011 w.D.V. 70,000
31-12-2011 Depreciation 25% 17,500
1-1-2002 W.D.V. 52,500
31-12-2002 Depreciation 25% 13,125
1-1-2003 W.D.V. 39,375
31-12-2003 Depreciation 25% 9,844

(3) If we prepare Costing P & L Alc, the balancing figure will be presumed to be
Factory Overheads 71,406 [(9,20,000 + 70,000 + 44,000 + 20,000) (80,000 +40,000
0,000+ 66,000+9,844 + 18,000+ 1,27,000 + 2,81,750)]. Factory Overheads vide FA.
=

7 90,000 Depreciation 20,000 70,000.

=

10.5 FROM P&LAC+ COST SHEET TO BE PREPARED

lustration 13
A Firm's Trading and Profit and Loss
Account was as following
Particulars Particulars 1,75,000
To Opening Stock 1,00,000 By SaleS
To Purchases
80,000
Less: Closing Stock
1,80,000|
80,000
1,00,000
 405

Acconnts
Cost and Financial
ciliation of
Reco

20,000
To Direct W a g e s
15,000 1,75,000
ctory Expenses
40,000
Profit
c/f 40,000
To
G r o s s
1,75,000 Total
To
Profit
Expenses
To dministrative Ex
Tota/ 10,000 By Gross
To Selling E x p e n s e s
15,000 40,000

15,000|
To N e t Profit
40,000 Total

Tolal

show the following

records
osting balance 89,000
Cos
Closing
Stock
Ledger
23,000 of the
selling
a) percent
at 8
(b) Direct Labour

13,000 calculated

c) Factory Overheads
each are and
selling expenses the proft
overheads and between

tive
( d )A d m i n i s t r a t i v
reconciliation

statement of t
of
Loss Account
and the
price Profit and
Prepare C o s t osting accounts.

the fwo
as per
loss Profit
of Cost and
S o l u t i o n
Statement

1,00,000
Elementof Cost * * *
80.000
** *** * 1,80,000|
DirectMaterials 91,000
* * * **

Opening S t o c k 89.000 23.000

* * " "

Purchasess
1,14,000

13.000
Less: Closing Stock
1,27,000p
Direct Wages 14.000
Prime Cost
** 1,41,000
Factory Overheads

14.000
Works Cost 1,55,000
Administrative Overheads

Cost o f P r o d u c t i o n
20.000
**
1,75,000D
Selling Overheads

Cost of Sales Profit

Costing
Costing Profit Profit and
Financial

Between

Sales R e c o n c i l i a t i o n

Statement
of 15,000

Particulars
FINANCIAL PROFIT 9,000
Financial
A/cs
Add U n d e r v a l u e d
in * * * *

Stock 80,000) 2,000

1. Closing (89,000 12,000
Materials in CostA/cs 1.000
Raw Under
recovered
27,000
13,000)
(15,000
2 O v e r h e a d s

Overheads 14,000)
Factory Overheads
(15,000 ***

Selling
3,000 7.000
Less recovered in Cost A/cs 4,000
Overheads
Over 20.00
20,000)
(23,000 10,000)
Direct Wages (14,000
Overheads
Administrative

CoSTING PROFITS
 Cost Accounting (T. Y.B. Com.
406
:
SEM-
lustration 14:
Chetan Ltd. for the year ended 31-12-201..
and Expenses of
Details of Income ar
Particulars
Particulars
39,200 By Gross Profit
To Office Expenses
To Selling Expenses 23,000 By Interest on Deposit 60,950
To Loss on Sale of Machinery 1,250 By Dividend 2,500
To Depreciation on Machinery 1,800 By Net Loss 3,450
To Depreciation on Building 2,300 1,850
To Debenture Discount 400
To Preliminary Expenses 800
68,750
68,750
As compared to Cost Accounts, Office indirect expenses are 12% more in Financial accounts whi
Selling indirect expenses are 8% less.
Depreciation on machinery was over-estimated by 350, while depreciation on building was
estimated by 150. under
Prepare (1) Statement of Cost and Profit/Loss and (2) Statement showing reconciliation of oroft o
loss of Cost Accounts with that of Financial Accounts
Solution:
(a) Statement of Cost and Profit/Loss

ParticularsS
GROSS PROFIT
Less: 60,950
Office Overheads ** *
35,000
39.200
1112
x100
Selling Overheads
25,000
23000x
92
100
Depreciation
Machinery (1,800 + 350)
2,150
Building (2,300 150) 2,150 64,300
cOSTING LOSS
3,350
(b) Statement of Reconciliation Between Financial Loss and
Costing Loss
Particulars
FINANCIAL LOSS
Add: 1,850
Income Credited in Financial A/cs
-

Interest on Deposits only

- Dividends 2,500
2. Depreciation Undercharged in Financial A/cs 3,450
-

Machinery (overcharged in Cost A/cs)

3. Overheads Over recovered in Cost A/cs 350
Selling Overheads (R 25,000 R 23,000) 8,300
2.000
Less 10,150
1.
-
Expenses/Losses/Appropriations
Loss
on Sale of Machinery
Debited in Financial A/cs
only
- Debenture Discount 1,250
400
-Preliminary Expenses w/o
2. Depreciation Overcharged in 800
Financial A/cs
**

Buildings (Undercharged in Cost A/cs) 150

3. Overheads Under recovered in Cost A/cCs
Office Overheads ( 39,200 35,000) 6,800
4.200
CoSTING LOSS 3,350

**
 u rhancial.

Accounts
Kecva

lustration 15
Givenbelow is the Trading and Pro
Profit and Loss
31-3-2014.

Account of Vikas
Particulars
Electronics for the accounting year
:

T0 Materals consumed
Particulars
To Direct Wages 3,00,000
2,00,000 By Sales f
To Factory Expenses (2,50,000 units) 7,50,000
T0 Office Expenses 1,20,000
40,000
10 Selling and distribution
Expenses
To Net Profit 80,000
10,000
7,50,000
al
Nomal
output of the tactoy Is 2,00,000 units. 7,50,000
xpenses are fixed. Selling and distribution Factory overheads are fixed
are variable. expenses are fixed to the upto 60,000 and ofice extentof 50,000; the rest
Prepare statement reconciling profit as per Cost Accounts
are a stat
and Financial accounts.
Solution:
(SYBAF, Nov. 2017, adapted)
Cost Sheet
ELEMENTOF COST
Direct Materials
3,00,000
Direct Wages "

*** *** ,"** 2.00.000

PRIME COST *** *** ** ***-"** 5,00,000
Factory Overheads
Variable ( 1,20,000 60,000) * ' *** **" 60,000
Fixed (60,000 x 2,50,000/2,00,000) 75,000 1.35.000
WORKS CoST 6,35,000
Office Overheads (40,000 x 2,50,000/2,00,000) 50.000
6,85,000
COST OF PRODUCTION
Sales/Distribution Overheads
30,000
Variable (80,000 50,000) 92.500
Fixed (50,000 x 2,50,000 /2,00,000)
* * * *** *** 62.500
* * *** **" ***|
7,77,500
COST OF SALES 27.500
cOSTING LOSS 7,50,000
SALES fixed
for output of 2,50,000
fixed for normal output
of 2,00,000 units. Hence
Note: Overheads are

overheads will increase (pro-rata). Profit

Financial Profit and Costing
Reconciliation Between
Statement of

10,000
Particulars
FINANCIAL PROFIT
Less: A/cs 15,000
recovered in OCost * * "

verheads over 10,000

(1,35,000 1,20,000) 37,500
Factory overheads
* **" **

40,000) 12.500
Ofice overheads (50,000 overheads (92,500 80,000) 27,500
and distribution
deling

COSTING LoSs the year

ended 31st
for
financial books
lustration 16 information from the
furnished the following
M a ,has
March, 2012.
 Cost Accounting (1. Y.B.Com.
408
:
SEM-
Trading and Profit and Loss Alc
Dr.
.
Particulars
Particulars
To Opening Stock
2,50,000 By Sales (47,500 units)
(Finished goods 2500 units)
20,80,000
By Closing Stock
(Finished Goods 5000 units)
59,85,000
5,00,000
To Raw Materials
To Direct Wages 15,15,000| By Commission Received
To Factory Expenses 10,18,000| By Bad Debts Recovered 35,000
and Administrative Expenses 8,45,000 By Net Loss 12,000
To Office 36,000
To Selling and Distribution Expenses 7,00,000
To Goodwill w/off 60,000
To Loss on Sale of Investments 1,00,000
65,68,000 65 68,000
Thefollowing information is revealed from the cost records for year ended 31st March, 2012.

(a) Raw material consumption is R 40 per unit of Production.

(b) Direct wages are 70% of Direct Materials.
(c) Factory overheads are recovered 50% of Direct Materials.
(d) Administrative overheads are taken 20% of Works cost.
(e) Selling and Distribution overheads are recovered 15 per unit.
() Opening stock of Finished goods is valued at 101.80 per unit.
(g) Closing stock of Finished goods is to be valued at cost of Production.
(h) Selling price is recorded at 125 per unit.
Prepare: () Detailed Cost Statement showing total cost, per unit cost and profit.
(i) Statement of Reconciliation (T.Y.B.Com., Mar. 13, adapted)
Solution
Statement of Cost For the Year Ended 31st March, 2012
50,000 Units
ELEMENT OF COST Per Unit
Direct Materials (50,000 x 40) **
40.00 20,00.000
Direct Wages (70% of Materials)
PRIME CoST
28.00 14.00.000
68.00 34,00,000
Factory Overheads (20,00,000 x 50%) 20.00 10.00.000
WORKS coST 88.00 44,00,000
Administrative Overheads (20%)
COST OF PRODUCTION
17.60 8.80.000
105.60|52,80,000
Add: Opening Stock of
Finished Goods (101.80) 2.54.500
55,34,500
Less: Closing Stock of Finished Goods
COST OF GOODS SOLD (105.60) 5.28.000
105.40 50,06,500
Add Selling & Distribution Overheads (47,500
COST OF SALES
x 15) 15.00 7.12.500
120.4057,19,000
Profit
4.602,18.500
Sales
125.00 59,37,500
(ii) Statement of Reconciliation as on 31st March, 2012
Particulars
Net Profit as per Cost Alc 2,18,500

Add
Over Valuation of Opening Stock in
Office Expenses charged more in
Costing (2,54,000 -2,50,000) 4,500
Cellina Expenses charged Costing (8,80,000 8,45,000) 35,000
Sales taken Less in Costingmore in Costing (7,12,500
(59,85.000 7,00,000)
500-7,00,000) 12,500
47,500
Commission Received reored in Financial A/c
A/c 35,000
Bad Debts Recovered in Financial A/csl 12,000 1,46,500

3,65,000
 ciliation of Cost and Financial Accounts

Valuation of Closing
Stock in Cost A/cs (5,28,000
(20,80.000 20 005,00,000) 28,000
-
L e s s

O v e r

Material charged less in Cost A/c O0

Raw Ma 80,000
ect Wages
charged Cost A/c (15,15,000 14,00,000)
less in
1,15,000
Factory
Enenses charged less In Cost A/c (10,18,000-10,00,000) 18,000
Financial A/c
w/off in 60,000
Goodwill of Investment charged in Financial A/cs
L O s so n Sale 1,00,000| 4,01,000
Per Financial Accounts 36,000
Loss
as
lustration 1 7 :

is the Profit
the Profit and Loss Account, as per Financial records, of M/s Tirupati Traders for the
ollowing is
31st March, 2014
vearended
Particulars
Particulars
To Opening Stock 59,760 By Sales 11,70,00o
(Finished 6,000 units) (90,000 units)
Materials Consumed 5,19,400 By Closing Stock 52,776
To Raw (Finished - 4,500 units)
To Carriage Inwards 5,100
72,872 By Bank Interest 410
To Direct Wages
To Salesmen Commission 38,520 By Dividend 6,900
To Office Salaries 25,368
Car Expenses 18,384
To Motor
To A d v e r t i s e m e n t 61,920
Remuneration :
To Directors
Office 12,000
Works 12,000
Sales 14.400| 38,400
To Indirect Wages 20,268
To Plant Depreciation 11,472
To Workmen Compensation
Reserve 13,275
To Office Rent 6,900
To After Sales Service Expenses 4,476
To Interest 6,000
To Showroom Rent 9,000
To Carriage Outward 6,240
To Depreciation on Delivery Van 5,040
To Factory Fuel 4,248
To Packing & Forwarding 3,270
To Misc. Factory Expenses 3,270
To Preliminary Exp. w/off 4,200
To Audit Fees 2,520
To General Office Expenses 1,500
To Factory Rent 18,720
To Loss on Sale of Investments 4,017
To Insurance
Office 300
Sales 720
Factory 1.800 2,820
To Printing & Stationery 720
o Depreciation
Factory Furniture 600
Office Furniture 900
Showroom Furniture 420 1,920
loTelephone Charges
Office 129
Sales 627 756
To Legal Fees 504
1o Net Profit c/d to B/S 2,59,226
|12,30,086 12,30,086
410 SEM-V)
stock in cost Accounts
is valued at cost ot production. However openina ck n
cost records
Closing
financial records.
is same as per
Prepare unit) and profit.
Detailed cost statement showing
total cost (excluding per
(a)
(b) Reconciliation statement showing reconciliation of Profits. (T.Y.B.Com., Mar. 09, adanto
Solution
ted)
coST SHEET
M/s. Tirupati Traders
Production 88,500 Units Sales - 90, 000 Units

ELEMENT OF COST
Raw material consumed 5,19,400
Carriage Inwards 5,100 5,24,500
Direct Wages 72.872
PRIME CoST
Factory Overheads
5,97,372
Directors Remuneration (works) 12,000
Indirect Wages 20,268
Plant Depreciation 11,472
Factory Fuel 4,248
Miscellaneous Factory Expenses 3,270
Factory Rent 18,720
Factory Insurance 1,800
Depreciation on Factory Furniture 600 72.378
WORKS COST 6,69,750
Office and Administrative Overheads
Office Salaries ** **
25,368
Motor Car Expenses 18,384
Directors Remuneration 12,000
Office Rent * ** * 6,900
Audit Fees ** "** ***
,520
General Office Expenses 1,,500
Office Insurance ******** **" 300
Printing and Stationery 720
Depreciation on Office Furniture 900
Office Telephone 129
Legal Fees 504 69.225
COST OF PRODUCTION 7,38,975
Opening Stock 59,760
Less: Closing Stock (7,38,975 x
COST OF GOODS SsOLD
4,500/88,500) (37.575)
7,61,160
Selling and Distribution Overheads
Salesmen Commission 38,520
Advertisements 61,920
Directors Remuneration (Sales) 14,400
After Sales Services Expenses
4,476
Showroom Rent
9,000
Carriage Outward 6,240
Depreciation on delivery Van
5,040
Packing and Forwarding
3,270
Sales Office Insurance 720
Depreciation on Showroom Furniture
420
Sales Office Telephone 627 1,44.633
COST OF SALES 9,05,793

Add Profit (balance)

*** ** *** **

2.64,207
Sales 11,70,000
 uncial
Accounts
Particulars Statement of Reconcliatlo
STING PROFIT

Income Credited in
ACC
ccount but not in Financial Profit
Cost
Bank Interest Record and Loss
ss 2,64,207
- Divideno

vervaluation of.
(Undervaluationiin losing stock in
cost records)
financial records 410
6,900
Less

Expenses charged to 15.201 22,511

account but not in cost financial profit and 2,86,718
Workmen Compensationrecords
- Interest
Reserve loss
Preliminary Expenses written off
Loss on Sale of ***.
13,275
FINANCIAL PROFIT Investments *** *** 6,000
4,200
Ilustration 18: 4.017 27.492
Followingis the Profit
and Loss
2,59,226
vear ended 31st March, 2013. Account as per financial records of M/s Niyati Enterpríses for the
Particulars
To Opening Stock Dr. Particulars
(Finished Goods 2,000
units) 2,50,000 By Sales Cr
To Direct Materials consumed
(Selling Price @ 125 p.u.) |30,00,000
To Carriage Outward 12,00,00o By Closing Stock 2,20,000
To Direct Wages 30,000 (Finished Goods 2,000
To Demonstration Expenses 8,00,000 By Dividend Received units)
To Legal Charges 30,000 10,000
To Haulage of
Machinery 40,000
To Depreciation (Plant & Machinery) 20,000|
To Printing and Stationery 1,50,00o
To Advertisement Expenses 40,000|
To Other Indirect 60,000
Works
Expenses
80,000
Office
Sales 80,000|
To Drawing Office Expenses
80,000 2,40,000|
To Audit Fees 60,000
To 40,000
Preliminary Expenses
To Net Profit
w/off 1,00,000
1,70,000
32,30,000 32,30,000
Forthe same period, Cost Accounting records showed the following
Depreciation on Plant and Machinery was recorded at 7 40,000.
2. Opening Stock of Finished Goods has been valued at R2,00,000.
.Closing Stock of Finished Goods has been valued at cost of production.
Prepare :
Detailed cost statement for the year ended 31st March, 2013 showing total cost (excluding per
unit) and profit.
6.
Statement of Reconciliation of Profits (Starting with Profit as per Cost Sheet).
(T.Y.B.Com., Oct. 13, adapted)
 Cost Accounting (T. Y.B. Com. :
SEM-V)
Jlution
Cost Sheet of M/s Niyati Enterprises for the year ended 31st March, 2013

ELEMENT OFCOST
Direct Materials |12,00,000
Direct Wages **'**' **' '** **'

8,00,000
PRIME CoST
Add Works Overheads
20,00.000
Haulage of Machinery *** *'*
20,000
Depreciation on Plant and Machinery 40,000
Indirect Expenses (Factory) 80,000|
Drawing Office Expenses 60,000 2,00,000
WORKS COST
Add: Office & Administration Overheads
*'*** '* ** ***

22,00.000
Legal Charges ** ** **
40,000
Printing & Stationery ** **' ***** ***
40,000
Indirect Expenses (Ofice) 80,000
Audit Fees
COST OF PRODUCTION
*" **' **" '* * '

40,0002.00.000
Add: Opening Stock of Finished Goods
24.00,000
.

2.00,000
Less: Closing Stock of Finished Goods
26,00,000
(24,00.000/24,000 x 2,000)
2.00.000
COST OF GOODS SOLD
Add: Selling& Distribution Overheads 24,00,000
Carriage Outwards 30,000
Demonstration Expenses 30,000
Advertisement Expenses * * * ** *'*.

60,000
Indirect Expenses (Sales)
COST OF SALES (TOTAL COST) 80,0002.00.000
PROFIT
26.00.000
4.00.000
SALES .
30.00.000
Statement of Reconciliation of Profits for the Year 2012-13

Particulars
Profit as Per Cost Records ** '* * 4,00.000
Add
1. Dividend received credited
only in Financial Books 10,000
2. Closing Stock of finished
goods overvalued in
Financial Books (2,20,000 2,00,000)
20,000 30,000
4,30 000
Less
1. Opening Stock of finished goods overvalued in
Financial Books (2,50,000 2,00,000)
50,000
2. Depreciation over charged in Financial Books 1,10,000
(1,50,000 40,000)
3. Preliminary Expenses w/off not recorded in
Cost Sheet.. 1,00,000 2,60.000
Profit as Per Financial Books 1,70,000

lllustration 19
Chinu Enterprise has furnished the following information from the financial books for the year ended
on 31st March, 2015:

Particulars Particulars
Opening Stock 1,40,000 Sales (10250 units) 28,70,000
(1000 units? 140 each) 1,50,000
Closing Stock
Material Consumed
10,40,000 (750 Units@7 200 each)
Wages 6,00,000
 U S t and Finano
Recoen

eial Accounts
Gross Profit c/d

40,000
Factory Expenses 30 20.000
Admnistration Expenses
selling Expenses
3,79,000
4,24,000O Gross Profit b/d 30,20,000
Bad Debts recovered
Bad Debts

piscount Allowed
2,20,000
16,000
Rent Received 12,40,000
,000
40,000
Net Profit 20,000
2,26,000
snct sheet shows the 12,85,000
overheads
factory overhea are
cost of materials at 7 104 12,85,000
absorbed at 60% of labour
per unitand the labour cost
Cost. Selling at 7 60 per
factory
expenses are charged at 25
cost and
administration overheads at
unit. The
valued at 180 per unit. per unit. The
opening stock of finished 20% OTis
Ou are required to prepare: goods
Astatement showing profit as per Cost Accounts
2. A statement
showing the reconciliation of for the year ended on 31st March 2015; and
shown in Financial Accounts. profit as disclosed in Cost Accounts with the
Solution: (ICWA Inter, Dec. 15, adapted) profit
Statement of Profit as per Cost
Accounts

Units
Opening Stock @ 180 per unit
Cost of ProductionR 240 per unit (WN 1)
** **" ** * ***

1,000 1,80,0000
Total 10.00024.00.000
***** ** ***" ***
11,000 25,80,000
Less:Closing Stock F 240 per unit
Cost of Goods Sold 7501.80.000
*"**"***:** **
10,250 24,00,000
Selling Expense F 25 per unit *** *** ******

2.56.250
Cost of Sales 26,56,250
Profit (Balancing Figure) *************
2.13.750
oales 10,250 28,70,000
Reconciliation Statement For the Year Ending 31-3-2015

PROFIT AS PER COST ACCOUNTS 2,13,750

Add
1. Over valuation of Opening Stock in Cost Accounts 40,000

(1,80,000 1,40,000) 36,250

Over recovery of Selling Expenses in Cost Accounts " * ** ** ***

(2,56,250 - 2,20,000)

income included only in Financial Accounts

5,000
Bad Debt recovered * ***
40,0001,21,250
Rent received 3,35,000

Less Accounts
30,000
Stock in Cost
Over valuation of Closing 19,000
(1,80,000 1,50,000)
Cost Accounts
*

Overheads in
Under recovery of Factory 24,000
(3,79,000 - 3,60,000) Accounts... **

Overheads in Cost
Under recovery of Admin.
4,24,000- 4,00,000) Financial
Accounts
16,000
in
EXpenses included only
* *** ***

20,000| 1,09,000
Bad Debts * * * * * * ***

2,26,0000
Discount Allowed
FINANCIAL ACCoUNTS
HOFIT AS PER
 Cost Accounting (T. Y.B. Com. :
SEM-)
Working Note Statement of Cost (10,000 Units)

Particulars Total Cost| Cost Per

Unit ?
Materials
Wages
*** *** *" ' *

10,40,000 104
*** *** * **
6,00,000 60
Factory Overhead 60% of Wages
Factory Cost 3.60.000 36
Administrative Overhead 20% of Factory Cost
20,00,000| 200
Total Cost
4.00,000 40
24,00,000| 240
lustration 20
Following is the summarised Profit and Loss Account of XYZ Industries for the year ended 31-3-2014
Profit and Loss Account for the year ended 31st March, 2014

Particulars Particulars
To Materials Consumed 2,00,000| By Sales (12,000 units)
To Wages 4,80,000
75,400 By Closing Stock 66,000
To Factory Expenses Paid 52,400 (Finished Goods 3,000 units)
Add Outstanding 2.200 54,600 | By Interest on Securities 17,000
To Administrative Overheads 52,500 By Profit on Sale of Assets
To Seling and Distribution Overheads 1,20,000
96,000
To Interest on Loans 14,000
To Income Tax 7,500
To Net Profit 1,83,000
6,83,000 6,83.000
The cost accounting record for the above period showed the following
(a) Material consumedT 10 per unit produced.
(b) Direct wages 6 per unit produced.
(c) Factory overheads were absorbed 25% of Prime Cost.
(d) Administrative overheads were absorbed 75 per unit produced.
(e) Selling and Distribution overheads were absorbed@ 7 per unit sold.
You are required to prepare the detailed Cost Sheet for the
of Reconciliation. year ended 31-3-2014 and a Statement
(T.Y.B.Com., Oct. 2014, Nov. 2017, adapted)
Solution :
In the Books of XYz Industries
Statement of Cost for the Year Ended 31st March, 2013 (Production 15,000 units
Elementof Cost Per unit
Total
Materials Consumed (15,000 x 7 10) 10
1,50,000
Direct Wages (15,000 x7 6) 90,000
Prime Cost 16
Factory Overheads (25% of Prime Cost) 2,40,000
60,000
Factory Cost 20
*
3,00,000
Administrative Overheads (15,000 x 7 5) 75,000
Cost of Production 25
3,75,000
Less Closing Stock of Finished goods (3,000 units @ 7 25 per 25
unit) (75,000)
Cost of Goods Sold
3,00,000
Selling and Distribution Overheads (12,000 x 7)
84,000
Cost of Sales 32
3,84,000
8
Profit 96,000
Sales /Selling Price 40
**
4,80,000
Kec
econcuultOn of Cost nd ncial Accounts
tatement of Recon
Stat

Particulars
oncllation tor the Yoar
fit as Per Cost Records Ending 318t
March, 2013
1. ireirect Wages
Facto Overhead
over
overed in Cost
over Recorde
3. Administratio
Overheadrecovered in Cost 96,000
ncome credite
only in recovered in Records
Interest on Securities Financial A/c Cost Records 14,600
-Profit on Sale of Assets 5,400
22,500
Less 17,000
Materials Consumedunder 1,20.000179.500
2. er Valuation of Closi
nand Distribution Overhead
recovered
Stock
in
in Cost Cost Records
2,75,500
under
Records 50,000
debited nly in
4. Expenses
- Interest on Loan Financial Profit recovered in
and Loss AlcCost Records
9,000
- Income Tax 12,000|
Profit as per Financial Accounts 14,000
1.500 92.500
lustration 21 1,83,000
rallowing is the summarised Profit and Loss
ended 31st Dec. 2014. Account of M/s Star
Manufacturing Co. Ltd. for the year
Profit and Loss Account for
the year ended 31st
Dec., 2014
Particulars
Particulars
To Wages 1,51,000| By Sales (12,000 units)
To Materials used 6,00,000
2,74,000 By Closing Stock of Finished Goods 16,000
To Factory Expenses 83,000 (400 units)
To Expenses on Administration 38,240 By Closing Stock of
To Selling Expenses 45,000 Work-in-Progress 12,000
To Goodwill written off 2,000 By Dividend Received 1,800
To Preliminary Expenses written off 4,000
To Net Profit 32,560
6,29,800 6,29,800
Inthe cost accounts
prime cost.
have been allocated to the production at 20%
on
1. Factory expenses
2. Expenses of administration at 7 3 per unit produced.
3. Selling expenses at 4 per unit sold.
the profits disclosed by Cost
Cost Sheet of the company and reconcile
Ou are required to prepare Oct. 2015, Apr. 2017, adapted)
those shown by Financial Accounts. (T.Y.B.Com.,
HCCOunts and
Solution
MANUFACTURING CO. LTD.
M/S STAR 2014
31st December
the Year Ended
Cost Sheet For units]
units and Sold 12,000
Production: 12,400

STEP ELEMENT OF COST 2,74,000

A. Direct Material ** *"" ** 1,51,000
4,25,000
Materials Used
B. Direct Wages
85,000
PRIME COST 73,000
* * * * *** '"*

(12,000)
Factory Overheads 4,98,0000
20% of Prime Cost Work-in-Progress
Closing stock of
Less
EFACTORY / WORKS COST
 Cost Accounting (T. Y.B. Com.
416
:
SEM-V
3 p.u. produced)
F. Administrative
Overheads : (F
per unit
* * ** *t**
3
12,400 units x
37,200
* * ** ***
coST OF PRODUCTION
G.
Less: Closing Stock of Finished
Goods 5,35,200
H.
( 5,35,200x 400 units
(17 265)
"* **' *** *** **

12,400 units
CoST OF GOODS SOLD * * * * *** *" **"

Selling Expenses: 4 p.u. sold) 5,17,935

J.
12,000 units x 4 per unit
*** *** ** *"' ***

48,000
coST OF SALES *** *** *** ***
K. 5,65,935
PROFIT
34,065
M. SALES " ** *** * * * **

6,00,000
Statement of Reconciliation for the Year Ending 31-12-2014

Particulars
Net Profit as per Cost Accounts
34,065
*** '*' ******

Add:
1. Dividend received recorded in P&L A/c only 1,800|
2. Factory overheads over recorded in cost accounts
85,000-7 83,000) ** ***" *** *** ***

2,000
3. Selling overheads over recorded in cost accounts
48,000- 7 45,000) 3,000
* **.
6,800
40,865
Less:
1. Administration overheads under recovered in cost accounts
38,240 - 7 37,200) 1,040
2. Goodwill written of recorded in Financial accounts only 2,000|
3. Preliminary expenses written off recorded in financial
accounts only * '"* ***
4,000|
4. Closing stock adjustment (F 17,265 -7 16,000) 1.265 (8,305)
Net Profit as per Financial Accounts 32,560
lustration 22
Following is the summarised Profit and Loss Account of Govind Industries Ltd. for the year ended
31-3-2016.
Profit and Loss Account for thee year ended 31-3-2016

Particulars Particulars
To Direct Material 20,000 By Sales (6,000 units) 48,000
To Wages 7,540 By Closing Stock of Finished Goods 6,600
To Factory Expenses 5,460 (1,500 units)
To Office Overheads 5,250 By Interest on Investments 17,700
To Seling & Distribution Overheads 9,600 By Profit on Sale of Furniture 12,000
To Interest on Loan 1,400
To Income Tax 750
To Net Profit
34,300
84,300 84,300
The cost accounting records for the above period showed the following :
1. Direct materialR5 per unit produced.
2. Direct wages 6 per unit produced.
3. Factory overheads were absorbed 25% of combined cost of Direct Material and Direct Wages
4. Administrative overheads were absorbed
2.5 per unit produced.
5. Selling and Distribution Overheads were absorbed 7 3.5 per unit sold.
You are required to prepare the detailed Cost Sheet for the year ended 31-3-2016 and a Statement
of Reconciliation.
(T.Y.B.Com., Nov. 2016, April 2016, adapted)
 ciliation of Cost and Financial Accounts
Reco.

Solution

GOVIND INDUSTRIES. LTD.

Cost Sheet For the Year Ended 31st March
2016
[Output: 7,500 units]

GTEP ELEMENT
OF COST
Direct Material 37,500
Direct Labour
45,000
B PRIME CoST
82,500
' '*°

Factory Overheads
D.
25% of Prime Cost 20,625
FACTORY/WORKS COST 1,03,125
E.
office and Administrative Overheads
F
7,500 units x R 2.50 per unit 18,750
COST OF PRODUCTION 1,21,875
G.
H. Less: Closing Stock of Finished Goods
71,21,876x 1,500 units
7,500 units (24,375)
cOST OF GOODS SOLD 97,500
J. Selling and Distribution Overheads
6,000 units x R 3.5 per unit **" **" ** *** ***
21,000
K. COST OF SALES 1,18,500
L.LOSS (Bal. Fig.) (70.500)
M. SALES / SELLING PRICE 48,000
Statement of Reconciliation for the Year Ending 31-12-2014

Particulars

Net Profit as per Financial Accounts 34,300

Add:
1. Expenses debited to Financial A/cs only
Interest on Loan 1,400
Income Tax 750
2. Closing Stock of Finished Goods undervalued
in Financial A/cs (24,375-6,600) 17.775 19,925
54,225
Less:
1. Materi over recovered in Cost Accounts (37,500-20,000) 17,500
Wages overrecovered in Cost Accounts (45,000 7,540) 37,460
Factory Overheads over recovered in Cost Accounts (20,625 5,460) 15,165
rice Overheads overrecovered in Cost Accounts (18,750 5,250) 13,500
.
Selling and Distribution over recovered in Cost Accounts
(21,000 9,600) 11,400
Income Credited only in Financial Accounts:
Interest on Investments 17,700
Profit on Sale of Furniture
NettLoss
* * *
12.000|(1,24,725)
as per Cost Accounts 70,500
lustration 23
endng is the Profit and Loss Account as per financial records of Kavita Enterprises for the year
ended 31 st
March, 2018.
ParticularsS
OMaterials consumed Particulars
o Direct Wages 5,20,000| By Sales (16,000 kgs) 20,72.000
o Factory Overheads 2,55,000| By Rent Income 1,50.000

Administrative Overheads 3,60,000 By Closing Stock 1,50.000

4,00,000 Finished Goods (2,000 kgs)
 Cost Accounting (1. Y.B.Com. : SEM-V)
To Sales Overheads 8,00,000 |
To Income Tax 30,000
To Net Profit 7,000

23,72,000
Forthe same period Cost Accounts Records showed the following: 23,72,000
1. Materials consumed 20,000 kgs. 27 per kg.
2. Direct wages 3,000 man days@ 90 per man day.
3. Factory overheads 20% of the Prime cost.
4. Administrative overheads 30
per kg of output produced.
5. Sales overheads @ 7 50
per kg of output sold.
6. Closing stock of Finished
g0ods was valued at cost of production.
7. Selling price was 135 per kg.
Prepare:
1. Cost Statement for the year ended 31st
2.
March, 2018 and
Statement of Reconciliation.
Solution (T.Y.B.Com., April 2016, adapted)
KAVITA ENTERPRISES
Cost Sheet For the Year Ended
31st March 2018
STEP ELEMENT OF COST
A. Direct Material
B.
(20,000 x
Direct Labour (3,000 x 27)
90) 5,40,000
C. PRIME COST *** **" **** *

D. Works Overheads
2,70,000
(20% x 8,10,000) 8,10,000
E. FACTORY IwORKS CoST
F
.
1,62,000
Office and Administrative
Overheads (18,000 x 30)
*** "** **

9,72.000
G. coST OF PRODUCTION
H. Less: Closing Stock
5,40,000
(2,000 x 84) **

15,12.000
coST OF GOODS SOLD
J. (1,68,000)
Selling and Distribution Overheads (16,000x 13,44,000
K. cOST OF SALES 50) *****

L.
** **

** 8,00,000
PROFIT/ (LOSS)
M. SALES (16,000 x 135) 21,44,000
(16,000)
Statement of Reconciliation for 21,60,000
the Year
Particulars Ending 31-3-2018
Net Profit as per
Add:
Financial Accounts
Income Tax debited to 7,000
Financial A/cs only
Sales undervalued in Financial
A/cs (21,60,000 ******

30,000
Closing Stock undervalued in Financial 20,72,000) 88,000
Work Factory Overhead Alcs (1,68,000
(3,60,000 - 1,62,000) under-recovered in Cost AVcs 1,50,000) 18,000

1.98.000 3,34,000
Less *** *
3,41,000
1. Rent credited to Financial A/cs
only
2. Materialovercharged in Cost A/cs (5,40,000 5,20,000) 1,50,000
3. Labour overcharged in
Cost A/cs (2,70,000 2,55,000) 20,000
A Administration Overnead over-recovered in Cost A/cs 15,000
(5,40,000- 4,00,000)
Net Profit as per Cost Accounts 140.000 (3,25.000)
16,000
 iliation of Cost andFinancial Accounts
Recon

flustration 24
is the i and Loss Account as per financial records of Shraddha Enterprises for the
lowing
31st March, 2018.
En
y e a r
nded
Particulars

Particulars T 410O
T Raw
Matenals consumed
2,50,000 By Sales (1,20,000 units) 7,00,000

To W a g e s 1,00,000 By Dividend received 45,000

To Factory E x p e n s e s

To Administrative Expenses
3,80,000| By Interest on Deposits 10,000

2,50,000 By Closing Stock

To Selling Expenses
4,80,000 Finished Goods (40,000 units) 1,20,000
To Legal Expenses 5,000 40,000
Work-in-Progress 5,80,000
To Bad Debts 15,000 By Net Loss
To Income Tax 15,000
14,95,000 14,95,000

The Cost Accounts revealed the following:

Factory overheads recovered at 20% on prime cost..
Administration overheads at 3 per unit produced.
3. Selling and distribution overheads at 4 per unit sold.
Prepare
1. Cost Statement for the year ended 31st March, 2018 and
Reconciliation (T.Y.B.Com., April 2017, adapted)
2. Statement of
Solution
SHRADDHA ENTERPRISES
Cost Sheet For the Year Ended 31st March 2018

STEP ELEMENT OF COST s

2,50,000
AB. Direct Material
Direct Labour 1,00,000
C. PRIME COST *** **" *** **" ** 3,50,0000
Works Overheads (20% x 3,50,000) 70,000
D. *

E. Less Closing Stock (WIP) (40,000)

F. FACTORY / WORKS COSST a"* *** ** **' *** 3,80,0000
G. Office and Administrative Overheads (1,60,000 x 3) 4,80,000
H. coST OF PRODUCTION (1,60,000 x 5) 8,60,000
Less: Closing Stock (FG) (40,000 x 5) (2,15,000))
. coST OF GOODS SOLD 6,45,000
K. Selling and Distribution Overheads (1,20,000 x 4) 4,80,0000
CoST OF SALES 11,25,00o
M. PROFIT/ (LOSS) (4,25,000)
N. SALES | 7,00,000
Statement of Reconciliation for the Year Ending 31-3-2018

Particulars
Net Loss as per Financial Accounts 5,80,000
Less:
Expenses debited to Financial A/cs only
-Incom Tax 15,000
-Bad Debts 15,000
Legal Expenses 5,000
Sales undervalued in Financial A/cs * .

Closing Stock undervalued in Financial A/cs (2,15,000 1,20,000) 95,000

Factory Overhead under-recovered in Cost A/cs
(3,80,000 - 70,000) ***** ** ** *** 3.10.000|(4,40,000)
** **' ** *** **
1,40,000