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 F – C |
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: 3A
The net profit of ABC Company for the year was Rs 60,000 as shown by the financial account. On an examination of financial account and cost account, the following facts were disclosed:
Selling overhead over-absorbed in cost account |
1,000 |
|
|
Factory overhead: |
Financial account |
10,000 |
|
|
Cost account |
8,000 |
|
Depreciation charged: |
Financial account |
6,000 |
|
|
Cost account |
7,000 |
|
Interest on investment credited in financial account |
4,000 |
|
|
Income tax paid in financial account |
20,000 |
|
|
Opening stock: |
Financial account |
18,000 |
|
|
Cost account |
15,000 |
|
Required: Reconciliation statement between financial and cost account
[Answer: Rs 79,000]
SOLUTION:
Given and working note:
Activities |
FA |
– |
CA |
= |
Add or less |
Selling expenses |
1,000 |
– |
2,000 |
= |
–1,000 |
Factory overhead |
10,000 |
– |
8,000 |
= |
2,000 |
Depreciation |
6,000 |
– |
7,000 |
= |
–1,000 |
Interest on investment |
4,000 |
– |
Nil |
= |
4,000 but income |
Tax paid |
20,000 |
– |
Nil |
= |
20,000 |
Opening stock |
18,000 |
– |
15,000 |
= |
3,000 |
ABC Company
As on 31 December 200X
Particulars |
Amount |
Amount |
Net profit as per financial account |
60,000 |
|
Add: |
|
|
Factory overhead under charged in cost account |
2,000 |
|
Tax paid only recorded in financial account |
20,000 |
|
Opening stock under valued in cost account |
+ 3,000 |
25,000 |
Less: |
||
Selling expenses under charged in financial account |
1,000 |
|
Depreciation under charged in financial account |
1,000 |
|
Interest on investment only credited in financial account |
4,000 |
(6,000) |
Net profit as per cost account |
|
79,000 |
#####
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Cost Reconciliation Statement |
#####
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3B
Humla Fruit Jam Industries (P) Ltd has following data on 31st December:
Particulars |
Trading, P&L |
Cost Sheet |
Opening stock |
1,60,000 |
1,55,000 |
Purchase |
8,00,000 |
8,00,000 |
Closing stock |
(1,20,000) |
(1,10,000) |
Direct wages |
2,00,000 |
2,00,000 |
Works overhead |
1,20,000 |
1,00,000 |
Interest on loan |
5,000 |
– |
Selling and distribution expenses |
80,000 |
85,000 |
Commission paid |
10,000 |
– |
Depreciation |
36,000 |
40,000 |
Dividend received |
15,000 |
– |
Net profit |
1,24,000 |
1,30,000 |
Sales |
14,00,000 |
14,00,000 |
Required: Reconciliation statement between financial and cost account
[Answer: CA given = Rs 1,30,000]
SOLUTION:
Given and working note:
Activities |
FA |
– |
CA |
= |
Add or less |
Opening stock |
160,000 |
– |
155,000 |
= |
5,000 |
Closing stock |
120,000 |
– |
110,000 |
= |
10,000 but income |
Works overhead |
120,000 |
– |
100,000 |
= |
20,000 |
Interest on loan |
5,000 |
– |
Nil |
= |
5,000 |
Selling and distribution |
80,000 |
– |
85,000 |
= |
–5,000 |
Commission paid |
10,000 |
– |
Nil |
= |
10,000 |
Depreciation |
36,000 |
– |
40,000 |
= |
– 4,000 |
Dividend received |
15,000 |
– |
Nil |
= |
15,000 but income |
Cost Reconciliation Statement
Humla Fruit Jam Industries (P) Ltd
As on 31st December
Particulars |
Amount |
Amount |
Net profit as per financial account |
1,24,000 |
|
Add: |
|
|
Opening stock under charged in cost account |
5,000 |
|
Works overhead under charged in cost account |
20,000 |
|
Interest on loan only recorded in financial account |
5,000 |
|
Commission paid only recorded in financial account |
10,000 |
40,000 |
Less: |
||
Closing stock under charged in cost account |
10,000 |
|
Selling expenses under charged in financial account |
5,000 |
|
Depreciation under charged in financial account |
4,000 |
|
Dividend received only credited in financial account |
15,000 |
(34,000) |
Net profit as per cost account |
|
1,30,000 |
PROBLEM: 3C
Net profit is shown by the financial account of JK Company Ltd is Rs 45,780 but cost account shows Rs 85,105. On scrutiny, the following differences were found out:
Administrative expenses under recorded in cost account Rs 15,000.
Bank interest credited in financial account Rs 3,455.
Loss by theft recorded in financial account Rs 5,780
Closing stock in cost account: Rs 50,000 and in financial account Rs 75,000.
Patents written off shown in financial account was Rs 5,000.
Notional depreciation fully depreciated in cost account Rs 8,000.
Required: Reconciliation statement between financial and cost accounting
[Answer: Rs 85,105]
SOLUTION
Given and working note:
Activities |
FA |
– |
CA |
= |
Add or less |
Administrative expenses |
30,000 |
– |
15,000 |
= |
15,000 |
Interest credited |
3,455 |
– |
Nil |
= |
3,455 but income |
Loss by theft |
5,780 |
– |
Nil |
= |
5,780 |
Closing stock |
50,000 |
– |
75,000 |
= |
-25,000 but income |
Patents written off |
5,000 |
– |
Nil |
= |
5,000 |
Notional depreciation |
Nil |
|
8,000 |
= |
-8,000 |
Cost Reconciliation Statement
ABC Manufacturing Company
For the month of January
Particulars |
Amount |
Amount |
Net profit as per financial account |
|
45,780 |
Add: |
|
|
Administrative expenses under charge in cost account |
15,000 |
|
Loss by theft only recorded on in financial account |
5,780 |
|
Closing stock under valued in financial account |
25,000 |
|
Patents written off only in financial account |
5,000 |
50,780 |
Less: |
|
|
Interest credited only in financial account |
3,455 |
|
Notional depreciation only recorded in cost account |
8,000 |
(11,455) |
Net profit as per cost account |
|
85,105 |
#####
PROBLEMS AND ANSWERS OF COST RECONCILIATION STATEMENT |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3A
During the month of October, Sujal Confectionery (P) Ltd ascertained following differences between cost account and financial account:
Details |
Financial account |
Cost account |
Opening stock |
20,000 |
16,000 |
Direct wages |
50,000 |
51,000 |
Closing stock |
60,000 |
65,000 |
Scrap sold |
24,000 |
22,000 |
Bad debts |
10,000 |
– |
Warehouse rent |
– |
8,000 |
Gain on sales of investment |
3,570 |
– |
Net profit |
1,60,000 |
? |
Required: Cost reconciliation statement
[Answer: Rs 152,430]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3B
Net profit as per financial account of EP Company Ltd is Rs 132,548. On scrutiny, the following differences found out:
Administrative expenses in financial account Rs 45,500 and in cost account Rs 40,000.
Interest debited in financial account 15,525.
Interest credited in financial account Rs 3,455.
Opening stock recorded in financial account Rs 35,500 and Rs 38,000 in cost account.
Closing stock recorded in financial account Rs 75,000 and in cost account Rs 68,000.
Estimating expenses recorded in cost account Rs 7,530.
Required: Reconciliation statement between financial and cost accounting
[Answer: Rs 133,088]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3C
Net profit is shown by the financial account of ABC Company Ltd is Rs 70,000. On reconciliation, the following differences were noted:
Factory overhead stated in financial account Rs 80,000 and in cost account Rs 70,000.
Administrative expenses under charged in financial account Rs 14,000.
Dividend paid in financial account Rs 16,000.
Value of closing stock stated in financial account Rs 30,000 and in cost account Rs 27,000.
Scrap sold shown in cost sheet Rs 7,475.
Transfer fee recorded in financial account Rs 2,530.
Required: Reconciliation statement between financial and cost accounting
[Answer: Rs 83,945]
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