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
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 |
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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