Page 43 - DCOM206_COST_ACCOUNTING_II

Cost Accounting – II

Notes Solution:
Reconciliation Statement
For the year ending 31st December, 2008
Particulars Amount (`)
Net profit as per cost books 26,032
Add: Office overheads recovered in excess i.e. (7,344 – 7,200) 144
Selling and distribution overheads recovered in excess i.e. (10,624 – 224 368
10,400)
26,400
Less: Factory overheads under recovered in cost accounts 800
(19,200 – 18,400)
Debenture interest not recorded in cost accounts 1,600 2,400
Net Profit as Financial Accounts 24,000

Problem 6:
ABC Manufacturing Company disclosed a net loss of ` 3,47,000 as per their cost accounts for the
year ended March 31st, 2008. The financial accounts, however, disclosed a net loss of ` 5,10,000
for the same period. The following information was revealed as a result of scrutiny of the
figures of both the sets of accounts:
Depreciation charged in financial accounts ` 3,25,000
Depreciation recovered in cost accounts ` 2,75,000
Interest on loan funds in financial accounts ` 2,45,000

Factory overheads under-absorbed ` 40,000
Administration overheads over-absorbed ` 60,000
Interest on investments not included in cost accounts ` 96,000
Income-tax provided ` 54,000

Dividend received ` 32,000
Transfer fee (credit in financial books) ` 24,000
Stores adjustment (credit in financial books) ` 14,000
Prepare a statement showing reconciliation between the figure of net loss as per cost accounts
and the figure of net loss shown in the financial books.
Solution:
Memorandum Reconciliation Account

Particulars ` Particulars `
To Net loss as per cost accounts 3,47,000 By Administration overheads over- 60,000
absorbed
To Factory overheads under-absorbed 40,000 By Interest on investments not 96,000
included in costs
To Income tax not recorded in cost 54,000 By Transfer fees in financial books 24,000
account
To Depreciation under absorbed in 50,000 By Stores adjustment 14,000
cost account
32,000
To Interest on loan funds in financial 2,45,000 By Dividend received Contd...
account
By Net loss as per financial books 5,10,000
7,36,000 7,36,000
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