Cost Reconciliation Statement | Net Loss As Per Financial Account

 

 

Method of Reconciliation

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)

 

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 4A

SBM Manufacturing Company has financial account loss Rs 90,000 on third quarter of 2020.

On scrutiny, following information found:

Works overhead overcharged in financial account Rs 144,000

Office expenses under charged in financial account Rs 45,000

Depreciation charged Rs 55,200 in financial according to but Rs 70,000 in cost account

Interest on overdraft Rs 25,000 debited in financial account.

Estimation expenses recorded in cost account Rs 15,300.

Patents written off Rs 20,000 in financial account

Required: Reconciliation statement between

[Answer: Rs 23,900]

SOLUTION:

Given and working note:

Activities	FA	–	CA	=	Add or less
Works overhead	288,000	–	144,000	=	144,000
Office expenses	45,000	–	90,000	=	– 45,000
Depreciation	55,200	–	70,000	=	– 14,800
Interest on overdraft	25,000	–	0	=	25,000
Estimation expenses	0	–	15,300	=	– 15,300
Patents written off	20,000	–	0	=	20,000

 

Cost Reconciliation Statement

SBM Manufacturing Company

For the third quarter

Particulars	Amount	Amount
Net loss as per financial  account		(90,000)
Add:
Depreciation over recorded in cost account	144,000
	25,000
Profit on sales of assets only recorded in financial account	20,000	189,000
Less:
Tax paid only recorded in financial account	45,000
Goodwill written off only recorded in financial account	14,800
Administrative expenses under recorded in cost account	15,300	(75,100)
Net loss as per cost  account		(23,900)

 

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PROBLEMS  AND  ANSWERS  OF  COST  RECONCILIATION  STATEMENT

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 4A

BCM Company has net loss as per financial account Rs 57,320 in March while the net loss as per cost account has Rs 22,500. On scrutiny both books, following facts revealed:

Director’s fee not charged in cost account Rs 13,000

Bank interest credited in financial account Rs 60.

Tax paid charged in financial account but not in cost account Rs 16,600

Provision for bad debts made in financial account Rs 1,140.

Obsolescence loss charged in financial account Rs 16,600.

Works overhead estimated Rs 17,000 in but actual were Rs 16,640.

Loss on sales of machinery Rs 20,000 charged in financial account.

Required: Reconciliation statement

[Answer:  (Rs 22,500)]

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 4B

The following extracted information is given to you by AM Partnership Firm:

Net loss as per financial accounting Rs 35,785.

Interest on capital debited in financial account Rs 17,450.

Selling expenses under recorded in cost accounting Rs 5,000.

Bad debts Rs 3,425 debited in financial accounting.

Goodwill written off Rs 23,000 in financial accounting.

Obsolescence loss of stock Rs 12,345 recorded in financial account

Warehouse rent paid recorded in cost account Rs 8,680.

Required: Reconciliation statement between financial and cost accounting

[Answer: Rs 4,455]

 

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