Q1. The net profit of ESSEL
PACKING CO LTD appeared 64,377 as per financial records for the year ended 31st
December, 2008. The cost books, however, showed a net profit of Rs 86,200 for
the same period. A scrutiny of the figures from both the sets of accounts
revealed the following facts:
|
Particulars
|
Rupees
|
|
Works
overhead under recovered in costs
|
1,560
|
|
Administration
overhead over - recovered in costs
|
850
|
|
Depreciation
charged in financial accounts
|
5,600
|
|
Depreciation
recovered in costs
|
6,250
|
|
Interest on investments
not included in costs
|
4,000
|
|
Loss due to
obsolescence charged in financial accounts
|
2,850
|
|
Income-tax
provided in financial accounts
|
20,150
|
|
Bank interest
and transfer fees in financial books
|
375
|
Stores adjustment (credit in financial books)
|
237
|
|
Loss due to
depreciation in stock values (charged in financial accounts)
|
3,375
|
Prepare a statement showing the
reconciliation between the figure of net profit as per cost accounts and the
figure of net profit shown in the financial books.
Q2. Prepare a reconciliation
statement from the following data:
|
Particulars
|
Rupees
|
|
Net loss as
per cost accounts
|
34,480
|
|
Net loss as
per financial accounts
|
43,209
|
|
Works
overheads under recovered in cost accounts
|
624
|
|
Depreciation
overcharged in cost accounts
|
260
|
|
Administration
overheads recovered in excess in cost
|
340
|
|
Interest on investments
|
1,750
|
|
Goodwill
written off in financial books
|
1,140
|
|
Income-tax paid
|
8,060
|
Stores adjustment (credit in financial books)
|
95
|
|
Depreciation
of stock charged in financial books
|
1,350
|
Q3. A Company’s profit as per
cost accounts is Rs 2,30,630 whereas the financial accounts showed a profit of
Rs 1,66,240. Following is the summarised financial profit & loss account.
You are required to prepare a reconciliation statement, indicating the reasons
for disagreement between the two profits.
|
Particulars
|
Rupees
|
Particulars
|
Rupees
|
|
To Raw Material Consumed
|
25,42,120
|
By Sales
|
34,65,000
|
|
To Direct Wages
|
2,31,330
|
By Sundry Income
|
3,160
|
|
To Factory Overheads
|
2,08,260
|
|
|
|
To Administration
Expenses
|
98,450
|
|
|
|
To Selling Expenses
|
2,21,760
|
|
|
|
To Net Profit
|
1,66,240
|
|
|
|
Total
|
34,68,160
|
Total
|
34,68,160
|
The costing records show:
i.
Stock
overvalued in cost accounts by Rs 30,760.
ii.
Factory
overheads absorbed Rs 1,97,140.
iii.
Direct
wages absorbed during the year Rs 2,48,670.
iv.
Administration
overheads 3% of selling price.
v.
Selling
expenses absorbed 5% of Sales.
Q4. The profit disclosed by a
Company’s cost accounts for the year was Rs 30,114, while the net profit shown
by the financial accounts amounted to Rs 19,760. On reconciling the figures the
following differences are brought to light:
a.
Overheads
in the cost accounts were estimated at Rs 7,500. The actual charge for the year
shown by the financial accounts was Rs 6,932.
b.
Expenses
not charged in the cost accounts was Rs 750.
c.
The
company has allotted Rs 600 to General Reserve.
d.
Work
was commenced during the year on a new factory and expenditure of Rs 12,000 was
incurred. Depreciation of 5% was provided for in the financial accounts.
e.
Transfer
fees received amounted to Rs 28.
f.
The
amount charged for income tax Rs 9,000.
Prepare a statement reconciling the
figures shown by the cost and financial accounts.
Q5. A Company’s Trading and
Profit & Loss Account is as follows:
|
Particulars
|
Rupees
|
Rupees
|
Particulars
|
Rupees
|
|
To Purchases
|
37,815
|
|
By Sales
|
1,12,500
|
|
Less: Closing Stock
|
6,120
|
31,695
|
(75,000 units @ Rs1.50)
|
|
|
To Wages (Direct)
|
|
15,750
|
By Profit on sale of
|
|
|
To Works Expenses
|
|
18,195
|
Machinery
|
3,900
|
|
To Selling Expenses
|
|
10,650
|
|
|
|
To Administration Exp
|
|
8,010
|
|
|
|
To Depreciation
|
|
1,650
|
|
|
|
To Net Profit
|
|
30,450
|
|
|
|
Total
|
|
1,16,400
|
Total
|
1,16,400
|
The profit as per Cost Accounts was Rs
29,475. Prepare reconciliation statement to reconcile Cost Profit with
Financial Profit.
Further information as per Cost
Accounts:
a.
Closing
Stock was taken as Rs 6,240
b.
The
work expenses taken at 100% of Direct Wages.
c.
Selling
and Administration Expenses were charged at 10% of sales and at Rs 0.10 per
unit respectively.
d.
Depreciation
was taken at Rs 1,200.
Q6. A company’s Trading and
Profit & Loss Account is as follows:
|
Particulars
|
Rupees
|
Rupees
|
Particulars
|
Rupees
|
|
To Opening Stock
|
100,000
|
|
By Sales
|
1,75,000
|
|
To Purchases
|
80,000
|
|
|
|
|
|
1,80,000
|
|
|
|
|
Less: Closing Stock
|
80,000
|
1,00,000
|
|
|
|
To Direct Wages
|
|
20,000
|
|
|
|
To Factory Expenses
|
|
15,000
|
|
|
|
To Gross Profit c/d
|
|
40,000
|
|
|
|
Total
|
|
1,75,000
|
Total
|
1,75,000
|
|
To Administration Exp
|
|
10,000
|
By Gross Profit b/d
|
|
|
To Selling Expenses
|
|
15,000
|
|
|
|
To Net Profit c/d
|
|
15,000
|
|
|
|
Total
|
|
40,000
|
Total
|
40,000
|
Costing records show the following:
a.
Stock
Ledger closing balance Rs 89,000
b.
Direct
Labour Rs 23,000
c.
Factory
Overheads Rs 13,000
d.
Administration
Overheads and Selling Exps each are calculated at 8% of the selling price.
Prepare Costing P&L a/c and
statement of reconciliation between the P&L as per the two a/cs.
Q7. The following is the
trading and profit & loss account of a manufacturing company for the year
ending 31st December, 2008
|
Particulars
|
Rupees
|
Particulars
|
Rupees
|
|
To Opening Stock of FG
|
400
|
By Sales (2,400 Units)
|
9,600
|
|
(100 units at Prime Cost)
|
|
By Closing Stock of FG
|
600
|
|
To Materials
|
3,000
|
(200 Units at Prime Cost)
|
|
|
To Wages
|
2,000
|
|
|
|
To Works Overheads
|
2,200
|
|
|
|
To Selling &
Distribution Overheads
|
800
|
|
|
|
To Net Profit
|
1,800
|
|
|
|
Total
|
10,200
|
Total
|
10,200
|
Factory overheads are charged at 40%
of prime cost, selling expenses are charged at Rs 3 per unit sold. Closing
stock is valued at prime cost. Prepare a Cost Sheet and a reconciliation
statement.
Q8. During the year a
Company’s profits have been estimated from the costing system to be Rs 23,063
whereas the final accounts prepared by the auditors disclose profit of Rs
16,624. Given the following information you are required to prepare a
Reconciliation Statement showing clearly the reasons for the difference.
|
Particulars
|
Rupees
|
Particulars
|
Rupees
|
|
To Opening Stock
|
2,47,179
|
By Sales
|
3,46,500
|
|
To Purchases
|
82,154
|
|
|
|
|
3,29,333
|
|
|
|
Less: Closing Stock
|
75,121
|
|
|
|
|
2,54,212
|
|
|
|
To Direct Wages
|
23,133
|
|
|
|
To Factory Overheads
|
20,826
|
|
|
|
To Gross Profit c/d
|
48,329
|
|
|
|
Total
|
3,46,500
|
Total
|
3,46,500
|
|
To Administration Exp
|
9,845
|
By Gross Profit b/d
|
48,329
|
|
To Selling Expenses
|
22,176
|
By Sundry Income
|
316
|
|
To Net Profit
|
16,624
|
|
|
|
Total
|
48,645
|
Total
|
48,645
|
The costing records show:
a.
A
Stock Ledger closing balance of Rs 78,197
b.
A
direct wages absorption account of Rs 24,867
c.
A
factory overhead absorption account of Rs 19,714
d.
Administration
expenses calculated at 3% of selling price.
e.
Selling
expenses are 5% on selling price.
f.
No
mention of sundry income.
Q9. Profit disclosed by a Company’s
cost accounts for the year was Rs 50,000, whereas the net profit as disclosed
by the financial accounts was Rs 29,750. Following information is available:
a.
Overheads
as per cost accounts were estimated at Rs 8,500. The charge for the year shown
by the financial accounts was Rs 7,000.
b.
Directors
fees in the financial accounts only Rs 2,000.
c.
The
company allowed Rs 5,000 as provision for doubtful debts.
d.
Work
was commenced during the year on a new factory and expenditure of Rs 30,000 was
made. Depreciation at 5% p.a. was
provided for in the financial accounts for 6 months.
e.
Share
transfer fees received during the year were Rs 1,000.
f.
Provision
for income tax was Rs 15,000.
Prepare a Reconciliation Statement
showing clearly the reasons for the difference.
Q10. In a factory of a moderate
size, factory overheads are taken at 200% of the wage bill, while the
administrative overheads are taken at 15% of the factory cost. Selling
overheads are taken at 10% of the sales value. For the year 2007-2008 the
company’s Profit & Loss Account showed the following position:
|
Particulars
|
Rupees
|
Particulars
|
Rupees
|
|
To Raw Material Consumed
|
10,000
|
By Sales
|
50,000
|
|
To Wages
|
5,000
|
By Income from
|
|
|
To Factory Overheads
|
11,000
|
Investment
|
2,000
|
|
To Administration Ohds
|
3,000
|
|
|
|
To Interest charges
|
3,000
|
|
|
|
To Selling Expenses
|
5,000
|
|
|
|
To Loss on sale of car
|
1,000
|
|
|
|
To Net Profit
|
14,000
|
|
|
|
Total
|
52,000
|
Total
|
52,000
|
Prepare reconciliation between the
profit as per financial accounts given above and the profit in the cost
accounts, after determining the same.
Q11. From the accounts of Allied
Co. Ltd, following manufacturing, trading and profit & loss accounts for
the year ended 31st December, 2008 was extracted:
|
Particulars
|
Rupees
|
Particulars
|
Rupees
|
|
To Opening Stock of Raw
Materials
|
29,500
|
By Clg. Stock of RM
|
32,000
|
|
To Raw Materials
purchased
|
1,86,500
|
By Work-in-progress
|
|
|
To Wages paid
|
2,81,000
|
Materials 4,000
|
|
|
To Wages accrued
|
17,000
|
Wages 5,500
|
|
|
To Factory Expenses
|
1,90,750
|
Factory
Exps 3,300
|
12,800
|
|
|
|
By Cost of Goods Manufactured (9,000 units)
|
6,59,950
|
|
Total
|
7,04,750
|
Total
|
7,04,750
|
|
To Cost of Goods
Manufactured
|
6,59,950
|
By Sales (7,600 units)
|
9,12,000
|
|
To Administrative
Expenses
To Selling &
Distribution Exps
|
1,22,500
1,64,000
|
By Closing Stock (1,400
units)
|
1,17,600
|
|
To Preliminary Exps
written off
|
10,000
|
By Int. on investment
|
1,300
|
|
To Goodwill written off
|
7,500
|
By Dividend earned
|
5,500
|
|
To Net Profit transferred to Appropriation a/c
|
72,450
|
|
|
|
Total
|
10,36,400
|
Total
|
10,36,400
|
The following procedure is adopted in
costing of the product:
a.
Factory
expenses are allocated to production @ 60% of the direct labour cost.
b.
Administrative
Expenses are applied @ 12 per unit over the units produced.
c.
Selling
& Distribution Expenses are so charged to work out 20% of the selling
price.
You are required to prepare a cost
sheet in respect of the above and reconcile costing profit with financial
profit.
Q12. The following figures have
been extracted from the financial accounts of a manufacturing firm for the first
year of its operation.
|
Particulars
|
Rupees
|
|
Direct
Material Consumption
|
50,00,000
|
|
Direct wages
|
30,00,000
|
|
Factory
Overheads
|
16,00,000
|
|
Administration
Overheads
|
7,00,000
|
|
Selling &
Distribution Overheads
|
9,60,000
|
|
Bad Debts
|
80,000
|
|
Preliminary Expenses written
off
|
40,000
|
|
Legal Charges
|
10,000
|
|
Dividends Received
|
1,00,000
|
|
Interest on deposits
received
|
20,000
|
|
Sales
(1,20,000 units)
|
1,20,00,000
|
|
Closing Stock:
|
|
Finished Goods (4,000 units)
|
3,20,000
|
|
Work-in-progress
|
2,40,000
|
The cost accounts for the same period
reveal that the Direct material consumption was Rs 56,00,000; Factory Overheads
is recovered at 20% on Prime Cost; Administration expenses is recovered @ Rs 6
per unit of production; selling & distribution overheads are recovered at
Rs 8 per unit sold.
You are required to prepare Costing
and Financial Profit & Loss Accounts and reconcile the difference in the
profits as arrived at in the two sets of accounts.
Q13. From the following
particulars prepare:
a.
Profit
and Loss Account
b.
Cost
Sheet calculating factory overheads at 25% on prime cost and office overheads
at 75% of factory overheads.
c.
A
profit reconciliation statement
Selling price is fixed at
cost plus 25%
|
Particulars
|
Rupees
|
|
Stock on 1st
January, 2008
|
|
|
Raw Materials
|
2,000
|
|
Finished
Goods
|
4,000
|
|
Stock on
31st December, 2008
|
|
|
Raw Materials
|
3,000
|
|
Finished
Goods
|
1,000
|
|
Purchase of Raw Materials
|
12,000
|
|
Wages
|
5,000
|
|
Sales
|
32,500
|
Factory overheads
|
3,875
|
|
Office
expenses
|
3,050
|
Q14. Falcon radio manufacturing
company commenced business on 1st January, 2008. It supplies you the
following information:
i.
Two
types of radios are manufactured viz “Shamma” and “Parvana”
ii.
There
were no radios in stock or in course of manufacture at the end of the year.
iii.
The
number of radios sold during the year were “Shamma” 1,200 and “Parvana” 840
iv.
The
other particulars were as follows:
|
|
“Shamma”
|
“Parvana”
|
|
Particulars
|
Rupees
|
Rupees
|
Materials per
radio
|
120
|
150
|
|
Wages per
radio
|
60
|
90
|
|
Selling price
per radio
|
350
|
450
|
v.
In
cost records:
a.
Wages
and materials are to be charged at the actual cost.
b.
Works
overheads at 80% on wages.
c.
Office
overheads at 20% on works cost.
vi.
Actual office expenses are Rs 1,10,000 and
factory expenses Rs 1,06,000.
You are required to prepare
i.
A
cost sheet in the columnar form showing total and per unit profit of both the
types of radio manufactured.
ii.
Profit
& Loss Account as per financial books.
iii.
A
statement to reconcile profit as per both the books
Q15. A company manufacturing
table fans, supplies to you the following data and asks you to prepare a
statement showing profit per table fan. Wages and materials are charged at
cost, works overheads at 80% of wages, and office on cost at 20% of works cost.
You are also required to prepare a statement reconciling the profit, as shown
by the cost accounts with the profits as shown by the financial accounts for
the year ended 31st March,2008.
Two types of table fans are
manufactured namely Model A and Model B. There is no fan in stock, number of
fans sold were A-1,500 and B-1,050
The other particulars were as under:
|
|
Model
A
|
Model B
|
|
Particulars
|
Rupees
|
Rupees
|
Materials per fan
|
100
|
80
|
|
Wages per fan
|
80
|
60
|
|
Selling price
per fan
|
300
|
250
|
Prepare the relevant statements,
showing the actual profits for the year if the works indirect expenses were Rs
82,000 and office on cost Rs 75,000.
Q16. The following is the
Trading, Profit & Loss Account for the Year ended 30the June 2008:
|
Particulars
|
Rupees
|
Particulars
|
Rupees
|
|
To Stock (1.7.2007)
|
7,500
|
By Sales
|
4,72,500
|
|
To Purchases 2,05,000
|
|
By Stock on hand
|
12,750
|
|
Less: Returns 2,500
|
2,02,500
|
(30.6.2008)
|
|
|
To Wages
|
63,750
|
|
|
|
To Factory Expenses
|
15,750
|
|
|
|
To Depreciation: Plant
|
18,300
|
|
|
|
To Gross Profit c/d
|
1,77,450
|
|
|
|
Total
|
4,85,250
|
Total
|
4,85,250
|
|
To Office Expenses
|
32,685
|
By Gross Profit b/d
|
1,77,450
|
|
To Selling &
Distribution Exps
|
51,330
|
By Profit on sale of Land
|
3,750
|
|
To Provision for Bad
Debts
|
2,000
|
By Int. on investment
|
1,875
|
|
To Interest on bank
overdraft
|
705
|
|
|
|
To Loss on sale of
Investments
|
1,500
|
|
|
|
To Goodwill written off
|
4,000
|
|
|
|
To Net Profit
|
90,855
|
|
|
|
Total
|
1,83,075
|
Total
|
1,83,075
|
Stock Valuation is done as under:
|
|
Opening
Stock
|
Closing Stock
|
|
Particulars
|
Rupees
|
Rupees
|
Material
|
4,050
|
6,900
|
|
Labour
|
2,250
|
3,600
|
|
Overheads
|
1,200
|
2,250
|
Total
|
7,500
|
12,750
|
In Cost Accounts:
i.
Recovery
rate applied were: Factory on cost @ 5% on sales; Selling & distribution on
cost @ 12% of sales; Office overheads Rs 28,000.
ii.
Stock
is valued at Prime Cost only.
iii.
Non
– Cost items should be excluded.
Ascertain profit shown by cost
accounts either by preparing a Memorandum Reconciliation Account or by drawing
a statement.
Q17. The net profit of a
company amounted to Rs 60,412 for the year ending 31st December, 2008,
as per the financial records. The cost records, however, revealed a different
figure. A scrutiny of the two sets of accounts disclosed the following facts:
a.
Work
overhead recovered in Cost Accounts during the period amounted to Rs 28,450
while the actual amount of these expenses was Rs 21,390 only.
b.
Actual
office expenses for the period were Rs 19,850, whereas the office overheads
recovered in Cost Accounts amounted to Rs 14,500.
c.
The
annual rental value of premises owned by the Company, amounting to Rs 10,800
was charged in Cost Accounts but not in financial accounts.
d.
Selling
and distribution expenses for the period amounting to Rs 16,490 were excluded
from costing records.
e.
Expenses
not included in cost accounts and shown in financial accounts are:
Ø
Interest on bank loan Rs 1,600
Ø
Bank charges Rs 160
Ø
Directors fees Rs 750
Ø
Penalty due to late completion on contract Rs
2,500
f.
Gains
during the year not included in Costs accounts:
Ø
Transfer fees Rs 45
Ø
Profit on sale of investments Rs 4,250
Ø
Interest on investments Rs 9,450
g.
The
following appropriations had been made in arriving at the profit figure of Rs
60,412;
Ø Transfer to Dividend Equalisation Fund Rs
10,500
Ø Transfer to Income-Tax Rs 6,400
Ø Transfer to Debenture Redemption Fund Rs
9,000
h.
A
sum of Rs 10,000 given as donation to the Prime Ministers Relief Fund had been
charged to Profit & Loss Account as business expense.
i.
Excess
depreciation charged in Cost Accounts Rs 2,400
Prepare Reconciliation Statement and
find the amount of net profit / loss as per the costing records.
Q18. The profit as per cost
accounts is Rs 1,50,000.
The following details are ascertained
on comparison of Cost and Financial Accounts.
|
|
Cost
Accounts
|
Financial Accounts
|
|
|
a. Opening Stock
|
|
|
|
Ø Material
|
10,000
|
15,000
|
|
|
Ø Finished Goods
|
18,000
|
16,000
|
|
|
b. Closing Stock
|
|
|
|
Ø Material
|
12,000
|
13,000
|
|
|
Ø Finished Goods
|
20,000
|
17,000
|
|
|
c. Interest charged but
not paid Rs 10,000
|
|
|
|
|
d. Write off Preliminary Expenses Rs
500 and Goodwill Rs 1,500
|
|||
|
e. Dividend on Units of Unit Trust
of India received Rs 1,000
|
|||
|
f. Indirect expenses charged in
financial accounts Rs 80,000 but Rs 75,000 recovered in cost accounts.
|
|||
Find out the profit as per financial
accounts by drawing up a Memorandum Reconciliation Account.
