Reconciliation statement can be prepared by two methods.
According to financial account or cost account; both have two methods.
They are net profit or net loss.
In this way, it is prepared on four ways.
(a) Net profit as per cost account
(b) Net profit as per financial account (profit and loss account)
(c) Net loss as per cost account
(d) Net loss as per financial account (profit and loss account)
Keep In Mind (KIM)
Question can be solved as per cost account in C – F |
If answer is in positive figure, it is added |
If answer is in negative figure, it is less |
These are exception for income and closing stock viz positive figure is less, negative figure is added. |
In place of over charge in financial account, we should write down under charge in cost account. |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2A
VK Metal Industries has net loss as per cost account Rs 14,250 in March.
On compression, cost and financial accounts the following facts were disclosed:
Work overhead over charged in cost account Rs 5,365.
Administrative overhead over charged in financial account Rs 9,325.
Over valuation of opening stock in financial account Rs 2,873.
Under valuation of closing stock in cost account Rs 6,540.
Internet banking charge Rs 200 recorded in financial account.
Interest on investment received in financial account Rs 3,720.
Required: Reconciliation statement of cost and financial account
[Answer: (Rs 11,023)]
SOLUTION
Given and working note:
Activities |
CA |
– |
FA |
= |
Add or less |
Works overhead |
10,730 |
– |
5,365 |
= |
5,365 |
Administrative overhead |
9,325 |
– |
18,650 |
= |
-9,325 |
Opening stock |
2,873 |
– |
5,746 |
= |
-2,873 |
Closing stock |
6,540 |
– |
13,080 |
= |
-6,540 but income |
Bank charge |
0 |
– |
200 |
= |
-200 |
Interest on investment |
0 |
– |
3,720 |
= |
-3,720 but income |
VK Metal Industries
For the month of March
Particulars |
Amount |
Amount |
Net loss as per cost account |
|
(14,250) |
Add: |
|
|
Work overhead over charged in cost account |
5,365 |
|
Under valuation of closing stock in cost account |
6,540 |
|
Interest on investment received only recorded in financial account |
3,720 |
15,625 |
Less: |
|
|
Administrative overhead over charged in financial account |
9,325 |
|
Over valuation of opening stock in financial account |
2,873 |
|
Internet banking charge only recorded in financial account |
200 |
(12,398) |
Net loss as per financial account |
|
(11,023) |
#####
PROBLEMS AND ANSWERS OF COST RECONCILIATION STATEMENT |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2A
The net loss shown by cost account of BN Bakery Industries is Rs 2,700
Reconciling the cost and financial accounts, following description were located:
Works overhead recovered in financial account Rs 30,000 but in cost account Rs 25,500.
Depreciation charged in financial account Rs 20,000 but in cost account Rs 24,650.
Income tax paid in financial account Rs 9,630.
Dividend income credited in financial account Rs 5,230.
Rent of godown recorded in cost account Rs 7,650
Required: Reconciliation statement of cost and financial accounts
[Answer: Rs 700]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2B
MK Noodles Industries shown cost account loss Rs 9,400 for the first quarter:
On reconciliation, following descriptions were located:
Depreciation in cost account Rs 30,000 and recorded in financial account Rs 28,000.
Income tax paid in financial account Rs 8,100.
Profit on sales of assets credited in financial account Rs 3,270.
Administrative expenses under recorded in cost account by Rs 10,000.
Goodwill written off recorded in financial account Rs 7,500.
Required: Reconciliation statement of cost and financial accounts
[Answer: (Rs 29,730)]
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