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Cost Accounting –Methods and Techniques

(As per the New Syllabus of Mumbai University for T.Y. B.Com., Sem. VI)

Winner of “Best Commerce Author 2013-14” by Maharashtra Commerce AssociationLion Dr. Nishikant Jha

ICWA, PGDM (MBA), M.Com., Ph.D., D. Litt. [USA],CIMA Advocate [CIMA U.K.], BEC [Cambridge University],

International Executive MBA [UBI Brussels, Belgium, Europe],Recognise UG & PG Professor by University of Mumbai.

Recognise M.Phil. & Ph.D. Guide by University of Mumbai.Assistant Professor in Accounts & (HOD) BAF, Thakur College of Science & Commerce.Visiting faculty in KPB Hinduja College for M.Phil. & M.Com., University of Mumbai.

CFA & CPF (USA), CIMA (UK), Indian & International MBA, CA & CS Professional Course.

Prof. Allan D’souzaVice Principal &

H.O.D. of Commerce & Accountancy,Guru Nanak Khalsa College, Mumbai-19.

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR KOLKATA GUWAHATI

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First Edition : 2016

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Preface

We are happy to present this book “Cost Accounting – Methods and Techniques” to thestudents of T.Y. B.Com. In this edition, an effect has been made to incorporate professionalexamination questions at relevant places in the book.

The syllabus contains a list of the topics covered in each chapter which will avoidcontroversies regarding the exact scope of the syllabus. The text follows the term-wise chaptertopics pattern prescribed in the syllabus. We have preferred to give the text of the section andrules as it is and thereafter added the comments with the intention of explaining the subject to thestudents in a simplified language. While making an attempt to explain in a simplified language,any mistake of interpretation might have crept in.

This book is a unique presentation of subject matter in an orderly manner. This is a student-friendly book and tutor at home. We hope the teaching faculty and the student community willfind this book of great use.

We are extremely grateful to Mr. Pandey of Himalaya Publishing House Pvt. Ltd. for theirdevoted and untiring personal attention accorded by them to this publication.

We owe a great many thanks to a great many people who helped and supported us during thewriting of this book which includes Principal, HOD, and Students of B.Com. Section.

We gratefully acknowledge and express our sincere thanks to the following people withoutwhose inspiration, support, constructive suggestions of this book would not have been possible.

Mr. Jitendra Singh Thakur (Trustee, Thakur College) Dr. Chaitaly Chakraborty (Principal, Thakur College) Mrs. Janki Nishikhant Jha.We welcome suggestions from students and teachers for further improvement of quality of

book.

Authors

Syllabus

Revised Syllabus and Question Paper Pattern of Courses ofB.Com. Programme at T.Y. B.Com. Semester VI with Effect from

the Academic Year 2014 -2015

FINANCIAL ACCOUNTING AND AUDITING PAPER - IXCost Accounting – Methods and Techniques

Modules at a Glance

Sr. No. Modules No. of Lectures

1. Cost Control Accounts 10

2. Contract Costing 15

3. Process Costing 15

4. Introduction to Marginal Costing 08

5. Introduction to Standard Costing 08

6. Some Emerging Concepts of Cost Accounting 04

Total 60

Scheme of ExaminationCredit Based Grading System Scheme of Examination Internal Assessment – 25% 25 Marks Semester End Examinations – 75% 75 Marks

Question Paper PatternDuration: 21/2 Hrs. Maximum Marks: 75

All questions are compulsory carrying 15 marks each. Questions to be Set: 05

Particulars Marks

Q.1 Objective Questions(a) Sub-questions to be asked 10 and to be answered any 08(b) Sub-questions to be asked 10 and to be answered any 07(*Multiple choice/True or False/Match the Column, Fill in the Blanks)

15 Marks

Q.2

Q.2

Full Length Practical QuestionORFull Length Practical Question

15 Marks

15 Marks

Q.3

Q.3


15 Marks

15 Marks

Q.4

Q.4


15 Marks

15 Marks

Q.5

Q.5

(a) Theory Questions(b) Theory QuestionsORShort NotesTo be asked 05To be answered 03

08 Marks07 Marks

15 Marks

Note: Full length question of 15 marks may be divided into two sub-questions of 08 and 07 marks.

Contents

1. Cost Control Accounts 1 – 40

2. Contract Costing 41 – 84

3. Process Costing 85 – 127

4. Introduction to Marginal Costing 128 – 143

5. Introduction to Standard Costing 144 – 162

6. Some Emerging Concepts of Cost Accounting 163 – 180

IntroductionCost accounting is a process of collecting, analysing, summarising and evaluating various alternative

courses of action. Its goal is to advise the management on the most appropriate course of action based onthe cost efficiency and capability. Cost accounting provides the detailed cost information that managementneeds to control current operations and plan for the future. Cost accounting information is commonly usedin financial accounting information, but its primary function is for use by managers to facilitate makingdecisions.

Unlike the accounting systems that help in the preparation of financial reports periodically, the costaccounting systems and reports are not subject to rules and standards like the Generally AcceptedAccounting Principles Cost accounting can be most beneficial as a tool for management in budgeting and insetting up cost control programmes, which can improve net margins for the company in the future.

Definition of Cost AccountingA type of accounting process that aims to capture a company's costs of production by assessing the

input costs of each step of production as well as fixed costs such as depreciation of capital equipment. Costaccounting will first measure and record these costs individually, then compare input results to output oractual results to aid company management in measuring financial performance.

Objectives of Cost AccountingThe main objectives of Cost Accounting are as follows: Ascertainment of Cost. Determination of Selling Price. Cost control and Cost Reduction. Ascertaining the Profit of each activity.

Uses of Cost Accounting1. Helps in Ascertainment of Cost: Cost Accounting helps in the ascertainment of cost of each

Product, Process job, Contract, Activity etc. by using different methods of costing such as JobCosting and Process Costing.

2. Helps in Control of Cost: It helps in the control of Material costs, Labour Costs and Overheadsby using different techniques of control such as Standard Costing and Budgetary Control.

3. Helps in Decision Making:It helps the Management in making various decisions such as –

(i) Whether to make or buy a component(ii) Whether to retain or replace an existing machine

Cost Control Accounts1

Chapter

2 Cost Accounting – Methods and Techniques

(iii) Whether to process further or not(iv) Whether to shut down or continue operations(v) Whether to accept orders below cost or not

(vi) Whether to expand or not(vii) How much reduction in the selling price should be made in case of depression

4. Helps in fixing Selling Prices: It helps the Management in fixing selling prices of products orservices by providing detailed Cost information.

5. Helps in Inventory Control: It helps in inventory by using various techniques such as ABCanalysis, Economic Order Quantity, Stock levels, Perpetual Inventory System and ContinuousStock Taking, Inventory Turnover Ratio etc.

6. Helps in Cost Reduction: It helps in the introduction of Cost Reduction Programme and findingout new and improved method to reduce costs.

7. Helps in measurement of Efficiency: It helps in measurements of efficiency of operationsthrough establishment of Standards and Variance analysis.

Integrated and Non-integrated System of AccountsNon-integrated System

Features:(i) Separate Books: In a non-integrated Cost accounting system there are separate cost accounts–

cost journals and cost ledgers.(ii) Principle of Double-entry: However, it too follows the fundamental principles of double entry

book-keeping (debit and credit) for this purpose.(iii) Cost Manual: As the number and types of transactions involved in accounting are numerous, a

number of individuals are employed in their recording and analysis. A cost manual is prepared forguidance of the staff. CIMA has defined a ‘cost manual’ as ‘a document which sets out theresponsibilities which sets out the responsibilities of the persons engaged in, and the routine of,and the forms and records required for, costing and cost accounting.’

(iv) Voucher: As in the case of financial accounting system, transactions are recorded in the Costjournal voucher, which provides the details necessary to support an entry in the cost accounts.

(v) Account/Code: Each entry is debited/credited to a cost account. CIMA has defined a ‘costaccount’ as ‘an account in the cost ledger’. Each account may be given a cost code. A ‘cost code’is a series of alphabetical and/or alpha-numerical symbol representing a descriptive title in a costclassification.’

(vi) Journal: These vouchers are first entered into cost journals. There may be one general journal tosummarise all original entries or separate journals may be kept to record labour, material, andoverhead transactions.

(vii) Ledger: From the cost journals, entries posted in the cost ledger. CIMA has defined a ‘cost ledger’as ‘a ledger whose accounts record those transactions which are included in costs.’ Cost ledgermay be divided into main and subsidiary ledgers. There may be a main ledger known as costledger and other subsidiary ledgers like stores ledger, work-in-progress ledger and finished stockledger.

Cost Control Accounts 3

Ledgers and Control AccountsSubsidiary Ledgers Corresponding control accounts

1.

2.

3.

Cost LedgerThis ledger consists of all impersonal accounts. It ismade self-balancing by maintaining a controlaccount for each of the other three ledgers explainedbelow.

Stores LedgerThis ledger consists of all stores accounts.Individual accounts are maintained for each items ofstore.Work-in-progress ledgerIn this ledger, cost of materials, wages andoverheads of each job undertaken is posted.

1.

2.

3.

General Ledger Adjustment (or cost ledger control)AccountThis account is essential to make the cost ledger ‘self-balancing’. All transactions of income and expenditurewhich originates in the financial accounts are entered inthis ledger for eventual transfer to cost account. Thebalance in this account will always be equal to the totalof all the balances of the impersonal accounts.Stores ledger control accountThis account is debited with all purchases of materialsfor the stores and credited with all issues of materials.

Work-in-progress control accountIt consists of all direct materials, direct wages, directexpenses, special purchases and expenses. Productionoverheads are debited to this account regarding totalwork-in-progress of different jobs at any time.

Control AccountsThe cost ledger contains two types of accounts to complete the double entry:1. Cost ledger control account2. Three cost control accounts (stores, WIP, and finished goods)A Cost ledger control account: CIMA has defined a ‘cost ledger control account’ as ‘an account

which is maintained in the principal ledger (and sometimes in the cost ledger) which records thetotals of the transactions recorded in detail in the cost ledger and provides a check on the accuracyof the latter.’ Cost ledger control account helps to record all items of income and expenditure. Thefunction of this account which is also referred to as General ledger adjustment account or nominalledger control account is quite important in a cost accounting system.

B Cost control accounts: The three cost control accounts – Stores ledger control account, Work-in-progress control account and Finished goods control account – help to exercise control over theconcerned subsidiary ledgers. Transactions kept in details in one or more accounts of thesubsidiary ledger are posted in totals, at the end of a period, to the control accounts.

I Stores ledger control account–– Records material cost: this account records materials functions–– Debits and credits: receipts are posted from goods received notes and issues from material

requisition or materials issue analysis sheet. The account also records issue of materials tooutside parties, returns through return notes, and stores adjustment through material transfernotes.

–– Balance: the balance of this account represents the total balance of stock which should agreewith the aggregate of the balances of individual folios in the stores ledger.

II Wages control account–– Records labour cost: This account records labour transactions.–– Debits and credits: Entries are made from wages analysis sheet. The account is debited with

the gross wages and is cleared by the transfer of direct labour to work-in-progress and indirect


labour to factory, administration and selling and distribution overhead control accounts orresearch and development account or capital account as the case may be.

III Factory overhead control account–– Records overheads costs: this account deals with manufacturing overhead expenses.–– Debits and credits: to this account is debited the amount of indirect materials, indirect labour,

and indirect expenses incurred. The figures are obtained from materials issue analysis sheet,wages analysis sheet, and expense analysis sheet. The account is credited with the amount ofoverhead recovered, as obtained from the applied overhead analysis sheet. Where separateoverhead applied account is opened, credit is given to this account.

IV Work-in-progress control account–– Debits: this account is debited with the opening balance of work-in-progress, and materials,

labour and factory overhead costs (recovered).–– Credit: this account is credited with the cost of finished goods.–– Balance: the balance of this account represents unfinished closing stock in process carried

over.V Finished goods control account

–– Debits: this account is debited with the opening balance of finished goods; the cost of finishedgoods for the period transferred from the work-in-progress control account and the amount ofadministration overhead recovered, if administration overhead is not treated as period cost.

–– Credits: it is credited with the cost of sales (by transfer to cost of sales account).–– Balance: the balance of the account after writing back the unrecovered administration

overheads, represents unsold stock carried over.VI Administration overhead account

–– Debits: administration overhead cost is debited to this account.–– Credits: the amount of overhead recovered in the finished goods sold is credited. Another

method is close the administration overhead account by transfer to costing profit and lossaccount. In this case, no amount of administration cost is charged to the finished goodsaccount. When administration overhead is prorated to manufacturing and selling anddistribution overheads, the administration overheads account is credited with the amount sotransferred.

VII Cost of sales account–– Debit: this account is debited with the cost of goods sold and selling and distribution

overhead recovered.–– Credit: it is closed by transfer to costing profit and loss account.

VIII Selling and distribution overhead account–– Debit: selling and distribution costs are debited to the selling and distribution overhead

account.–– Credit: at the end of the period, the account is closed by transfer to cost of sales account.

IX Overhead adjustment account–– Debits and credits: the amount of under-absorbed or over-absorbed factory, administration,

selling and distribution overheads may be debited or credited to this account. Sometimes theaccount is not maintained and the amount of under-absorption or over-absorption istransferred directly to costing profit and loss account.


–– Balance: the balance at the end of a period, may be either(i) Carried over to the next accounting period

(ii) Or transferred to costing profit and loss account(iii) Or prorated to cost of sales account, work-in-progress account and finished stock

account.–– Balance: the closing balance of this account represents the costing profit or loss which should

be reconciled with the financial profit or loss.

Integrated SystemMeaning:

CIMA has defined Integrated system as “a system in which the financial and cost accounts areinterlocked to ensure that all relevant expenditure is absorbed into the cost accounts.” Under this accountingsystem transactions are classified both according to their function and share.

Integrated account is the name given to a system whereby cost and financial accounts are kept in thesame set of books.

Features:

1. Financial transactions: The integrated system records, besides internal costing transactions, otherfinancial items not normally required for cost accounting. Accounts for capital expenditure, sundrycreditors and debtors, share capital, cash and bank transactions, and pre-payments and accruals areopened.

2. Store transactions: Store transactions are recorded in the stores control account. The cost ofstores purchased is debited to the stores control account and credit is given to cash or sundrycreditors accounts depending upon whether the purchase is made for cash or credit.

3. Wages and expenses: The wages paid are debited to the wages control account; correspondingcredit is taken in the cash or bank account. Similarly, overhead expenses incurred are debited tothe overhead control account by credit to the cash or bank account or the sundry creditors account.

4. Third entries: Suitable cost analysis is made of the transactions relating to material, labour andoverhead, which are posted in the stores, wages and overhead control accounts and at the end ofthe accounting period, transfer of the total is made to the work-in-progress account by crediting thevarious control accounts.

5. Accruals and pre-payments: All accruals are debited and advance payments credited to therespective control accounts by contra entries in the accrual and pre-payments accounts.

6. Capital expenditure: Capital expenditure is separated in the process of cost analysis and creditedto the control accounts by debit to the capital assets account.

7. Cost control account: Sometimes a separate ‘cost control account’ is opened to record the costtransactions. The wages control and overhead control accounts are dispensed with and alltransactions relating to wages and overhead are entered in the cost control account.

8. Work-in-progress accounts: The work-in-progress account may be split up into three separateaccounts material-in-process, labour-in-process and factory overhead-in-process accounts.

Advantages:Integral or integrated accounting records all financial and cost accounting transactions in one

combined ledger. The advantages of integral accounting are as follows:


1. No separate financial A/c: The need for separate sets of financial and cost accounts ledger doesnot exist. This saves clerical expenditure.

2. No reconciliation: There is no need for reconciliation between the financial and cost accounts.3. Cross-check ensures accuracy: There is an automatic check on the correctness of the cost data

and this ensures that all legitimate expenditure is included in cost accounts.4. Avoid Duplication: Fewer accounts and records are required, and duplication in accounting and

analysis is avoided.5. No delay: As cost accounts are posted straight from the books of original entry there is no delay in

obtaining cost data.6. Complementary: Integral system offers an additional advantage from the psychological point of

view. It shows the complementary status of cost and financial accounting which need not beconsidered as two separate watertight compartments.

7. Economy: Centralised as well as computerised accounting, which is possible in the integratedsystem, results in economy.

8. Pooling of knowledge: The knowledge of financial and cost accounting may be pooled together.9. Wider Outlook: Integrated accounting widens the outlook of the accountant and his staff who are

placed in a better position to appreciate the entire accounting system.10. Avoids Cost ledger control A/c: In integral accounting, there is no need to open a cost ledger

control account because it is possible to post each transaction on double entry basis without thenecessity for opening a balancing account.

3. On 1st March, 2014 the following balances were extracted from the books of TS Company:Particulars Amount Debit Amount Credit

Stores Ledger Control A/c 8,75,000Work-in-Progress Control A/c 9,50,000Finished Goods Control A/c 6,25,000

– 24,50,00024,50,000 24,50,000

The following transactions took place in March, 2014Particulars `

Raw Materials:Purchased 23,75,000Returned to Suppliers 75,000Issued to Production 24,50,000Returned to Stores 75,000

Productive Wages 10,00,000Indirect Wages 6,25,000Factory Overheads 12,50,000Selling and Distribution Overheads 10,00,000Cost of Finished Goods Transferred to Warehouse 53,25,000Cost to Goods Sold 52,50,000Sales 75,00,000

Factory overheads are applied to production at 150% of Direct wages, any under/over absorbed beingcarried forward for adjustment in the subsequent months. All selling and distribution overheads aretransferred as period costs and charged to Costing Profit and Loss A/c of the month in which they areincurred.


1. Nominal Ledger Control A/c2. Stores Ledger Control A/c3. Wages Control A/c4. WIP Control A/c5. Finished Goods Control A/c6. Factory Overheads Control A/c7. Cost of Goods Sold A/c8. Selling and Distribution Overheads Control A/c9. Costing Profit & Loss A/c

10. Trial Balance as on 31-3-2013 [Modified, MU]

Solution:

In the Cost Ledger of TS Company Leger A/cs for the Month Ended 31-03-2014Nominal Ledger A/c

Particulars ` Particulars `To Stores Ledger Control A/c 75,000 By Balance b/d 24,50,000To Sales A/c 75,00,000 By Stores Ledger Control A/c 23,75,000To Balance c/fd. 11,25,000 By Factory Overheads Control A/c 12,50,000

By Wages Control A/c 16,25,000By Selling & Distribution

– Overheads Control 10,00,00087,00,000 87,00,000

Stores Ledger A/c

Particulars ` Particulars `

To Balance b/d 8,75,000 By Work in Progress Control A/c 24,50,000To Nominal Ledger A/c 23,75,000 By Nominal Ledger A/c 75,000To Work in Progress Control A/c 75,000 By Balance c/fd. 8,00,000

33,25,000 33.25,000

Work in Control A/cParticulars ` Particulars `

To Balance b/d 9,50,000 By Finished Goods Control A/c 53,25,000To Stores Ledger A/c 24,50,000 By Stores Ledger Control A/c 75,000To Wages Control A/c 10,00,000 By Balance c/fd. 5,00,000

15,00,000 –59,00,000 59,00,000

Finished Goods Control A/cParticulars ` Particulars `

To Balance b/d 6,25,000 By Cost of Goods Sold 52,50,000To WIP Control A/c 53,25,000 By Balance c/fd 7,00,000

59,50,000 59,50,000

Selling and Distribution Overheads Control A/cParticulars ` Particulars `

To Nominal 10,00,000 By Costing Profit & Loss A/c 10,00,00010,00,000 10,00,000


Cost of Goods Sold A/c


To Finished Goods Control A/c 52,50,000 By Costing Profit & Loss A/c 52,50,00052,50,000 52,50,000

Costing Profit and Loss A/cParticulars ` Particulars `

To Cost of Goods Sold A/c 52,50,000 By Sales A/c 75,00,000To Selling & Distribution

Overheads A/c10,00,000

To Balance c/fd 12,50,000 –75,00,000 75,00,000

Trial Balance of TS Company as on 31-03-2014Particulars Debit ` Credit `

Stores Ledger Control A/c 8,00,000Work-in-Progress Control A/c 5,00,000Finished Goods Control A/c 7,00,000Factory Overheads A/c 35,75,000Profit & Loss A/c 12,50,000Nominal Ledger Control A/c – 11,25,000

23,75,000 23,75,0001. From the following information provided by Rishabh Industries Ltd. for quarter ended 31st March

2012, pass necessary journal entries in the Cost Journal, under Non-Integrated System: (April 2013)Particulars `

Materials Purchased 5,25,000Materials Purchased for Special Jobs 32,000Materials Issued to Production 4,25,000Materials Returned to Suppliers 15,000Direct Wages 2,20,000Factory Overheads Incurred 1,80,000Administration Overheads Incurred 1,45,000Indirect Wages 60,000Materials Issued for Repairs 53,000Factory Overheads Absorbed at 75% of Direct Wages ?Administration Overheads Absorbed 1,20,000Production Finished During the Year 8,00,000Cost of Finished Goods Sold 10,00,000Sales 12,00,000Transfer to General Reserve 25,000

Solution:Journal Entries in the Cost Journal of Rishabh Industries Ltd.

Non-Integrated System of Accounting

Particulars Debit ` Credit `

Stores Ledger Control A/c Dr.To General Ledger Control A/c

(Being Materials Purchased)

5,28,0005,28,000


WIP Ledger Control A/c DrTo General Ledger Control A/c

(Being Materials purchased for Special Jobs)

32,00032,000

WIP Ledger Control A/c Dr.To Stores Ledger Control A/c

(Being Material Issued to Jobs)

4,25,0004,25,000

General Ledger Control A/c Dr.To Stores Ledger Control A/c

(Being Materials Returned)

15,000 15,000

WIP Ledger Control A/c Dr.To Wages Control A/c

(Being Direct Wages)

2,20,0002,20,000

Production Overheads A/c Dr.To General Ledger Control A/c

(Being Production Overheads Incurred)

1,80,0001,80,000

Administration Overheads A/c Dr.To General Ledger Control A/c

(Being Administration Overheads Incurred)

1,45,0001,45,000

Production Overheads A/c Dr.To Wages Control A/c

(Being Indirect Wages)

60,00060,000

Production Overheads A/c Dr.To Stores Ledger Control A/c

(Being Material Issued for Factory Repair)

53,00053,000

WIP Ledger Control A/c Dr.To Production Overhead A/c

(Being Production Overhead Absorbed by Production @ 75% of Direct Wages)

1,65,000 1,65,000

Finished Goods Ledger Control A/c Dr.To Administration Overheads A/c

(Being Administration Overheads Charged to Finished Goods)

1,20,0001,20,000

Finished Goods Ledger Control A/c Dr.To WIP Ledger Control A/c

(Being Finished Goods Produced)

8,00,0008,00,000

Cost of Sales A/c Dr.To Finished Goods Ledger Control A/c

(Being Cost of Finished Goods Sold)

10,00,00010,00,000

General Ledger Control A/c Dr.To Sales A/c

(Being Sales Effected)

12,00,00012,00,000

No Entry for Transfer to General Reserve


2. Pass Journal Entries for Following Transaction under Non-integrated System of Accounts`

Purchase of Materials 1,50,000Direct Wages Paid 80,000Administration Overheads Incurred 60,000Selling and Distribution Overheads Incurred 40,00,000Production Overheads Incurred 1,20,000Materials Issued to Jobs 70,000Materials Issued to Factory for Repairs 20,000Finished Goods Produced 2,25,000Production Overheads Absorbed by Production 1,05,000Administration Overheads Absorbed by Finished Goods 65,000Selling and Distribution Overheads Recovered on Sales 35,000Cost of Finished Goods Sold 2,50,000Sales 3,00,000Sales Returns (At Cost) 10,000Materials Returned Suppliers 5,000Materials Returned From Jobs 4,000

(MU, April 2013)

Solution:Journal Entries under Non-Integrated System of Accounting

Particulars Debit ` Credit `Stores Ledger Control A/c Dr.

To General Ledger Control A/c(Being Materials Purchased)

1,50,0001,50,000

WIP Ledger Control A/c Dr.To General Ledger Control A/c

(Being Direct Wages Paid)

80,00080,000

Administrative Overheads A/c Dr.To General Ledger Control A/c

(Being Administration Overheads Incurred)

60,00060,000

Selling & Distribution Overheads A/c Dr.To General Ledger Control A/c

(Being selling & Distribution Overheads Incurred)

40,00040,000

Production Overheads A/c Dr.To General Ledger Control

(Being Production Overheads Incurred)

1,20,0001,20,000

WIP Ledger Control A/c Dr.To Store Ledger Control A/c

(Being Material Issued to Jobs)

70,00070,000

Production Overheads A/c Dr.To Stores Ledger Control A/c

(Being Material Issued for Factory Repair)

20,00020,000

Finished Goods Ledger Control A/c Dr.To WIP Ledger Control A/c

(Being Finished Goods Produced)

2,25,0002,25,000

WIP ledger Control A/c Dr.To Production Overhead A/c

(Being Production Overhead absorbed by Production)

1,05,0001,05,000

Finished Goods Ledger Control A/c Dr.To Administration Overheads A/c

(Being Administration Overheads Charged to Finished Goods)

65,00065,000


Cost of Sales A/c Dr.To Selling & Distribution A/c

(Being Selling & Distribution Overheads Recovered on Sales)

35,00035,000

Cost of Sales A/c Dr.To Finished Goods Ledger Control A/c

(Being Cost of Finished Goods Sold)

2,50,0002,50,000

General Ledger Control A/c Dr.To Sales A/c

(Being Sales Effected)

3,00,0003,00,000

Finished Goods Ledger Control A/c Dr.To General Ledger Control A/c

(Being Sales Returns at Cost)

10,00010,000

General Ledger Control A/c Dr.To Stores Ledger Control A/c

(Being Materials Returned)

5,0005,000

Stores Ledger Control A/c Dr.To WIP Ledger Control A/c

(Being Materials Returned from Jobs)

4,0004,000

4. A Company operates separate Cost Accounting and Financial Accounting Systems. The followingis the list of opening balances as on 1st January, 2015 in the Cost Ledger:


General Ledger Adjustment A/c – 2,20,000Stores ledger Control A/c 64,385 –Work-in-Progress Ledger Control A/c 1,15,415 –Finished Goods Ledger Control A/c 40,200 –

2,20,000 2,20,000Particulars `

Production Overheads Incurred 1,15,115Factory Wages Paid (Including Indirect Wages ` 29,500) 98,500Materials Purchased 42,800Materials Issued to Factory Repairs 54,000Materials Issued to Production 3,385Production Overheads under Absorbed and Written off 4,000Sales 3,00,000

The Company’s Gross Profit is 20% on Factory Cost at the end of the quarter. Work-in-Progress stockincreased by ` 10,200.

You are required to prepare:(i) General Ledger Adjustment A/c (ii) Stores Ledger Control A/c

(iii) Work-in-Progress Ledger Control A/c (iv) Finished Goods Ledger Control A/c(v) Costing Profit & Loss A/c (vi) Trial Balance as on 31st March, 2015

(October 2012)

Solution:

Stores Ledger Control A/c


To Balance b/d 64,385 By W.I.P. Control (Issues) 54,000To General Ledger Control Purchase 42,800 By Factory Overhead Control Repair 3,385

– By Balance c/d. 49,8001,07,185 1,07,185


Wages Control A/c


To General Ledger Control Wages Paid By WIP Control 69,00098,500 (Balance Fig)

– By Factory old Control - Ind 29,80098,500 98,500

Factory Overhead Control A/c


To Stores Ledger Control Repair 3,385 By Costing P/ L A / cTo Wages Control 29,500 Written Off 4,000To General Ledger Control - FOH 1,15,115 By WIP Control (Bal. Fig) 1,44,000

1,48,000 1,48,000

Work-in-Progress Control A/cParticulars ` Particulars `

To Balance b/d 1,15,415 By Finished Goods ControlTo Stores Control 54,000 -Production 2,56,800To Wages Control 69,000 By Balance c/d 1,44,000To Factory O/H Control 1,44,000 (Opening Bal. + 10,200) 1,25,615

3,82,415 3,82,415

Finished Good Control A/c


To Balance b/d 40,200 By Costing A/c (Cost of Sale Transferred) 2,50,020

To WIP Control (Production) 2,56,800By Balance c/d

– (Bal. Fig) 46,980

2,97,000 2,97,000

Note: Sale Value = 3,00.000 and the G.P. is 20% on factory cost. i.e. 16.66% on sales value.Hence Cost of Sales = 3, 00,000 × 83.34% = 2,50,020.Cost of Sale ` 2,50,202 can also be first transferred to Cost of Sales A/c and from that accounttransferred to costing Profit and Loss A/c.

Sales A/cParticulars ` Particulars `

To Costing Profit & Loss A/c By General Ledger Control A/c 3,00,000(transferred) 3,00,000 –

3,00,000 3,00,000

Costing Profit & Loss A/cParticulars ` Particulars `

To Finished Goods By Sales A/c. 3,00,000(transferred. Bal. Fig.) 2,50,020

To Costing Profit (46% on Sales) 49,980 –3,00,000 3,00,000

To Factory OH Control By G.P. b/d. 49,980– written off 4,000


To General Ledger Control(Bal. Fig.) 45,980 –

49,980 49,980

General Ledger Control A/cParticulars ` Particulars `

To Sales 3,00,000 By Balance b/d 2,20,000By Stores Control 42,800By Wages Control 98,500By Factory OH Control 1,15,115

To Balance c/d (Bal. Fig) 2,22,395 By P/L A/c (Profit tran.) 45,9805,22,395 5,22,395

Trial Balance as on 31-3-2015Particulars Debit ` Credit `

Stores Ledger Control A/c 49,800

WIP Control A/c 1,25,615 –

Finished Goods Control A/c 46,980 –

General Ledger Control A/c – 2,22,395

2,22,395 2,22,395

6. XYZ Ltd. is maintaining its book under Integrated Accounting System. You are furnished with thefollowing information of the company for the year ended 31st March, 2012. The Balance as on 31st March,2015, the Balance as on 31st March, 2014 and 31st March, 2015 are as follows:

Particulars 31-03-2014 ` 31-03-2015 `Stock :

Raw Materials 8,25,600 7,27,200Work-in-Progress 2,68,800 2,28,000Finished Goods 5,04,000 5,80,800

Fixed Assets (Written Down Value) 3,00,000 2,85,000Debtors 4,41,600 5,85,000Creditors 3,64,800 4,51,200

Cash Transactions during the year:Particulars `

Payment Made To:Creditors 4,32,000Direct Labour 3,07,200Production Overheads 2,59,200Administration Overheads 33,600Selling and Distribution Overheads 1,10,400

Collection from Debtors 13,20,000Cash and Bank Balance as on 31st March, 2012 2,25,600

Additional Information:(a) The production overhead is absorbed into Cost of Products @ 90% on Direct Labour Cost.(b) The finished Goods stock is valued at factory cost.(c) All Fixed Assets were used in Factory.

You are required to prepare:1. Stores Ledger Control A/c2. Work-in-Progress Control A/c3. Finished Goods Control A/c


4. Production Overhead Control A/c.5. Profit and Loss A/c for the year ended 31st March, 2015.6. Balance Sheet as on 31st March, 2015.

Solution:

Stores Leger Control A/cParticulars ` Particulars `

To Balance b/d 8,25,600 By W.I.P. Control A/c 6,16,800To Creditors (Purchase) 5,18,400 By Balance c/d 7,27,200

13,44,000 13,44,000

Work-in-Progress Control A/cParticulars ` Particulars `

To Balance b/d 2,68,800 By Finished Goods Control A/c 12,41,280To Store Ledger & Control A/c 6,16,800 By Balance c/d 2,28,200To Direct Labour 3,07,200To Production OHS Control A/c 2,76,480 –

14,69,280 14,69,280


To Balance b/d 5,04,000 By Cost of Production A/c 11,64,480To W.I.P. Control A/c 12,41,280 (Tfd to P & L A/c) –

– By Balance c/d 5,80,80017,45,280 17,45,280

Production Overheads Control A/c


To Cash & Bank A/c 2,59,200 By W.I.P. Control A/c 2,76,480To Depreciation Fixed Asset 15,000 (90% of Direct Labour)To Profit & Loss A/c (Overhead) 2,280 –

2,76,480 2,76,480

Profit and Loss A/c


To Cost of Production 11,64,480 By Sales (No. 2) 14,13,600

To Administrative Overheads 33,600 By Production Over 2,280To Selling and Dist. Overheads 1,10,400 Cont. A/c (Overabsorbed)To Net Profit 1,07,400 –

14,15,880 14,15,880

Balance Sheet as on 31st March, 2012Liabilities ` Assets `

Capital (B/F) 20,23,200 By Fixed Asset (WDV) 2,85,000Profit and Loss A/c 1,07,400 Current AssetsCreditors 4,51,200 Stock:

Rew Materials 7,27,200W.I.P. 2,28,000F.G. 5,80,800


Debtors 5,35,200– Cash and Bank Balance 2,25,600

25,81,800 25,81,800Working Note:1. Calculation of R. M. Purchases = Cl. Crs. + Cash paid to Crs – Op. Crs.

= 4,51,200 + 4,32,000 – 3,64,800 = 5,18,4002. Calculation of Sales = Cl. Drs + Cash Received from Drs – Op. Crs.

= 5,35,200 + 13,20,000 – 4,41,600 = 14,13,6003. Capital (Opening) = (All Assets – Creditors Including Op. Cash)

= 23,88,000 – 3,64,8004. Opening Cash Balance = Cl. Balance + All Payments – Collection from Drs.

Opening Balance = 2,25,600 + 11,42,400 – 13,20,0007. The balances appearing in the Cost Ledger of the Kishore Engineering Co. Ltd. as on 1st April

2015.Particulars Debit ` Credit `

General Ledger Adjustment A/c – 48,500Stores Ledger Control A/c 32,000 –Work-in-Progress Ledger Control A/c 10,500 –Finished Goods Ledger Control A/c 6,000 –

48,500 48,500Transactions for the year ended 31st March, 2016 were as follows:

Particulars `

Purchase of Stores 1,85,000Purchase for Special Job 8,000Direct Wages 78,000Indirect Factory Wages 12,500Administrative Salaries 36,000Selling and Distribution Salaries 17,500Production Expenses 18,400Administration Expenses 24,000Selling and Distribution Expenses 10,500Stores Issued to Maintenance Department 4,500Stores Issued for Production 1,75,000Stores Returns to Suppliers 1,500Production Overheads Absorbed By Production 37,000Administrative Overheads Absorbed by Finished Goods 58,000Selling and Distribution Overheads Recovered on Sales 26,500Finished Goods Produced During the Year 2,95,000Cost of Finished Goods Sold 3,50,000Sales 4,10,000

You are required to prepare:1. General Ledger Adjustment A/c2. Stores Ledger Control A/c3. Work-in-Progress Ledger Control A/c


4. Finished Goos Ledger Control A/c5. Costing Profit & Loss A/c6. Trial Balance as 31-3-2016

Solution:

General Ledger Adjustment A/c


To Stores Ledger Control A/c 1,500 By Balance b/d 48,500(Return) By Stores Ledger Control A/c 1,85,000

To Costing Profit & Loss A/c (Sales) 4,10,000 By WIP Ledger Control A/c 8,000To Balance c/d 58,500 By Wages Control A/c 1,44,000

(78,000 + 12,500 + 36,000 +17,500)By Production Overheads A/c 18,400By Administrative Overheads A/c 24,000By Selling and Distribution A/c 10,500By Costing Profit & Loss A/c (Profit) 31,600

4,70,000 4,70,000

Store Ledger Control A/c


To Balance b/d 32,000 By Production Overhead A/c 4,500To General Ledger Adj. A/c 1,85,000 By WIP Ledger Control A/c 1,75,000

By General Ledger Adjustment A/c(Return)

1,500

– By Balance c/d 36,0002,17,000 2,17,000

Work-in-Progress Leger Control A/c


To Balance b/d 10,500 By Finished Goods Ledger A/c 2,95,000To General Ledger Adj. A/c 8,000 Control A/cTo Wages Control A/c (Direct Wages) 78,000 By Balance c/d 13,500To Stores Ledger Control A/c 1,75,000To Production Overheads A/c 37,000 –

3,08,500 3,08,500

Finished Goods Ledger Control A/c


To Balance b/d 6000 By Cost of Sales A/c 3,50,000To Administrative Overheads A/c 58,000 By Balance c/d 9,000To WIP Ledger Control A/c 2,95,000 –

3,59,000 3,59,000

Costing Profit and Loss A/cParticulars ` Particulars `

To Cost of Sales A/c 3,76,500 By General Ledger Adjustment A/c 4,10,000(3,50,000 + 26,500)(Cost of F.G. + Selling Overheads)


To Overheads Adjustment A/c) 1,900(Under Absorbed)

To General Ledger Adjustment A/c 31,600(Profit) – –

4,10,000 4,10,000

Trial Balance as on 31-3-2016Particulars Debit ` Credit `

General Ledger Adjustment A/c – 58,500Stores Ledger Control A/c 36,000 –Work-in-Progress Ledger Control A/c 13,500 –Finished Goods Ledger Control A/c 9,000 –

58,500 58,500

Working NoteCalculation of Over Absorption / Under Absorption of OHS

Particulars ProductionOHS

AdministrativeOHS

Selling of DistributionOHS

Total

General Ledger Adjustment A/c 18,400 24,000 10,500 52,900Wages Control A/c 12,500 36,000 17,500 66,000Stores Ledger Controls A/c 4,500 – – 4500Total (Debit) 35,400 60,000 28,000 1,23,400Less: Absorbed (Credit) 37,000 52,000 26,500 1,21,500Overabsorbed / Underabsorbed (1,600) 2,000 26,500 *1.,900

Under absorbed therefore + Fd to (Dr.) of Costing of OHS8. The cost ledger of Delta Ltd. showed the following balances as on 1st January, 2015


Stores Ledger A/c 1,05,000Work in Progress A/c 78,400Finished Goods A/c 55,800Works on Cost A/c 1,000Administration on Cost A/c 600Financial Ledger Control A/c – 2,38,800

2,39,800 2,39,800

Following details are given for the year ended on 31st December, 2015Particulars `Stores Purchase 3,60,000Stores Issued to Production 3,93,000Stores Issued to Works on Cost 15,000Wages 6,15,000Productive Labour 5,90,000Unproductive Labour 25,000Carriage Inwards 6,000Works on Cost Allocated to Production 1,79,000Works Expenses 1,40,000Administration Expenses 18,000Administration on Cost Allocated to Production 18,400Finished Goods Produced during the Year 11,72,000


Cost of Finished Goods sold during the Year 12,00,000Selling Expenses 13,400

Prepare the necessary accounts in the cost ledger for the year 2015 and Trial Balance as on 31stDecember, 2015 (Nov., October 2013)

Solution:

Delta Ltd.Stores Ledger A/c

Particulars ` Particulars `To Balance b/fd 1,05,000 By W.I.P. 3,93,000To Fin./Gen. Ledger Control A/c By Work on Cost

Purchases 3,60,000 (Mat. Issued to Work and Repair Order)Carriage inwards 6000 15,000

– By Balance c/fd 63,0004,71,000 4,71,000

Wages Control A/cParticulars ` Particulars `

To Fin./ General Ledger Control A/c 6,15,000 By Work-in-Progress 5,90,000– By Work on Cost 25,000

6,15,000 6,15,000

Cost of Sales A/cParticulars ` Particulars `

To Finished Goods A/c 12,00,000 By Balance c/fd 12,13,400To Fin./ General Ledger Control A/c 13,400 –

12,13,400 12,13,400

Work-in-Progress A/cParticulars ` Particulars `

To Balance b/d 78,400 By Finished Goods 11,72,000To Stores Ledger A/c 3,93,000 By Balance c/fd 86,800To Wages A/c 5,90,000To Work on Cost 1,79,000To Administration on Cost 18,400 –

12,58,800 12,58,800

Finished Goods A/cParticulars ` Particulars `

To Balance b/d 55,800 By Cost of Sales 12,00,000To Work-in-Progress 11,72,000 By Balance c/fd 27,800

12,27,800 12,27,800

Work on Cost A/cParticulars ` Particulars `

To Stores ledger A/c 15,000 By Balance b/d 1,000To Wages A/c 25,000 By W.I.P. 1,79,000To Fin./Gen. Ledger Control A/c 1,40,000 –

1,80,000 1,80,000


Fin./General Ledger Adj. A/cParticulars ` Particulars `

To Balance c/fd 13,91,200 By Balance b/f 2,38,800By St. Ledger Control A/c 3,6000By Wages 6,15,000By Stores Ledger Control 6,000By Works Expenses 1,40,000By Administration Expenses 18,000

– By Sales Expenses 13,40013,91,200 13,91,200

Trial BalanceParticulars ` (Dr.) Particulars ` (Cr.)

Stores Ledger A/c 63,000 Fin./Gen. Ledger A/c 13,91200Work in Progress A/c 86,800Finished Goods A/c 27,800Administration on Cost A/c 200Cost of Sales A/c 12,13,400 –

13,91,200 13,91,2009. The following were the balances appearing in the cost books of Cost Conscious Ltd. at the start of a

month:` (in lakhs)

Stores Ledger Control Account 80Work-in-Progress Control Account 20Finished Goods Control Account 430Building Construction Account 10General Ledger Adjustment Account 540

During The month the following transactions took place:Materials Purchased 40Materials Issued to production 50Materials issued to general maintenance 6Materials issued to building construction 4Wage - Direct wages paid 150

- Indirect wages paid 40- Paid for building construction 10

Works Overheads - Actual amount incurred(excluding items shown above) 160

- Absorbed in building construction 20- Under absorbed 8

Royalty paid 5Selling, distribution and administration overheads 25Sales 450At the end of the moth, the stock of raw materials and work-in-progress was ` 55 lakhs and ` 25 lakhs

respectively. The loss arising in the raw materials accounts is treated as factory overheads. The buildingunder construction was completed during the month. Company’s gross profit margin is 20% on sales.

Prepare the relevant control accounts to record the above transactions in the cost ledger of thecompany for the month.


In the Book of Cost Conscious Ltd.W-I-P A/c


To Balance B/d 20 By Finished Goods 333To SLC A/c 50To Works Cost Control A/c 100To Royalty 5To Fixed Overhead 183 By Balance c/d 25

358 358

Finished Good A/cParticulars ` Particulars `

To Balance B/d 430 By COGS 360To W/P 333 By Balance C/d 403

763 763

Works Cost Control A/cParticulars ` Particulars `

To General Ledger Adjustment A/c 150 By W/P A/c 100By Factory Overhead 40

– By Building Construction 10150 150

Royalty Control A/cParticulars ` Particulars `

To G.L. Adjustment A/c 5 By W/P A/c 55 5

Factory Overhead A/cParticulars ` Particulars `

To Stores Ledger Control A/c 6 By Building Construction 20To Works Cost 40 By Costing P & L A/c 8To G.L. Adj. A/c 160 By WIP 183

5 –211 211

Administrative & Selling & Distribution A/cParticulars ` Particulars `

To G.L. Adj. A/c 25 By Cost of Sales 2525 25

Cost of Goods Sold A/cParticulars ` Particulars `

To Finished Goods A/c 360 By Cost of Sales 360360 360

General Led. Adj. A/cParticulars ` Particulars `

To Building Construction A/c 44 By Balance B/d 540To Sales A/c 450 By S.L. Control A/c 40To Balance c/d 483 By Works Cost Control A/c 150

By Royalty A/c 5


By fixed Overheads A/c 160By Admin. & Selling & Dis. A/c 25

– By Costing P/L A/c 57977 977

Cost of Sales A/cParticulars ` Particulars ` Cr.)

To COGS A/c 360 By Costing P/L A/c 385To Admin & S & D A/c 25 –

385 385

Sales A/cParticulars ` Particulars ` (Cr.)

To Costing P/L A/c 450 By GLA A/c 450450 450

Costing P & L A/cParticulars ` Particulars ` (Cr.)

To Fixed Overhead A/c 8 By Sales A/c 450To Cost of Sales A/c 385To GLA A/c 57 –

450 450

Building Construction A/cParticulars ` Particulars ` (Cr.)

To Balance b/d 10 By GLA A/c 44To SLC A/c 4To Works Cash Control A/c 10To Fixed Overheads A/c 20 –

44 44

Store Ledger Control (SLC) A/c

Particulars ` Particulars ` (Cr.)To Balance b/d 80 By W/P A/c 50To GLA A/c 40 By Factory Overhead 6

By Building Construction 4By Factory Overhead (Loss) 5

– By Balance C/d 55120 120

10. As on 31st March, 2015 the following balances existed in a firm’s cost ledger:Particulars Dr. ` Cr. `

Stores Ledger Control A/c 3,01435

Work-in-Progress Control A/c 1,221365

Finished Stock Ledger Control A/c 2,51,945

Manufacturing Overhead Control A/c 10,525

General Ledger Control A/c – 6,65,220

6,75,745 6,75,745


Following data relates to the next three months:`

Finished Product (At Cost) 2,10,835Manufacturing Overhead Incurred 91,510Raw Materials Purchased 1,23,000Factory Wages 50,530Indirect Labour 21,665Cost of Sales 1,85,890Material Issued to Production 1,27,315Sales Returned to Cost 5,380Material Returned to Suppliers 2,900Manufacturing Overhead Charged to Production 77,200You are required to write up the Ledger Account for quarter ended 30-6-2015

Solution:

Cost Ledger

General Ledger Control A/c (GLC)


To SLC A/c (Return) 2,900 By Balance B/d 6,65,220To Balance C/d. 9,49,025 By Manufacturing OH Control A/c 91,510

By SLC A/c 1,23,000– By Wages Control A/c 72,195

9,51,925 9,51,925

Store Ledger Control (SLC) A/c


To Balance B/d 3,01,435 By WIP Control A/c 1,27,315To GLC A/c 1,23,000 By GLC A/c 2,900

– By Balance C/d 2,94,2204,24,435 4,24,435

WIP Control A/c


To Balance B/d 1,22,365 By Finished Stock Ledger –To Wages Control A/c 50,530 Capital A/c 2,10,835To SLC A/c 1,27,315 By Balance C/d 1,66,575To Manufacturing OH Control A/c 77,200 –

3,77,410 3,77,410

Finished Stock Ledger Control A/c.Particulars ` Particulars `

To Balance B/d. 2,51,945 By Cost of Sales 1,85,890To WIP Control A/c. 2,10,835 By Balance C/d. 2,82,270To Cost of Sales (Return at Cost) 5,380

4,68,160 4,68,160


Mfg. Overhead Control A/c.


To GLC A/c. 91,510 By Balance B/d. 10,525To Wages Control A/c. 21,665 By WIP Control A/c. 77,200

- By Balance C/d. 25,450

1,13,175 1,13,175

Wages Control A/c.Particulars ` Particulars `

To GLC A/c. 72,195 By WIP Control A/c. 50,530- By Manufacturing OH Control A/c 21,665

72,195 72,195

Cost of Sales A/c.Particulars ` Particulars `

To Finished Stock Ledger By Finished Stock Ledger ControlControl A/c 1,85,890 A/c. (Return) 5,380

- By Balance C/d. 1,80,5101,85,890 1,85,890

11. Form the following information you are required to prepare necessary Ledger Accounts and TrialBalance under system of integrated accounts in the books of Excel Co. Ltd.

Particulars `Material Purchased on credit 29,600Wages paid 33,600Wages productive 29,600Wages unproductive 4,000Material issued to production 25,600Works expenses incurred 13,000Finished goods at cost 60,000Works expenses charged to production 17,000Administration expenses paid and charged to production 8,800Selling overheads paid and charged to sales 6,000Cash sales 85,000

(April 2010)

Solution:

In the books of Excel Co. Ltd.

Stores Control A/cParticulars ` Particulars `

To Creditors A/c 29,600 By WIP Control A/c 25,600- By Balance c/d 4,000

29,600 29,600



To Bank A/c 33,600 By WIP Control A/c 29,600By Factory Overheads

- Control A/c 4,00033,600 33,600

W.I.P. Control A/cParticulars ` Particulars `

To Wages Control A/c 29,600 By Finished Stock Control A/c 60,000To Stores Control A/c 25,600 By Balance c/d 21,000To Factory Overhead Control A/c 17,000To Administrative Overhead Control A/c 8,800

81,000 81,000

Factory Overheads Control A/cParticulars ` Particulars `

To Wages Control A/c 4,000 By WIP Control A/c 17,000To Bank A/c 13,000

17,000 17,000

Administrative Overheads Control A/cParticulars ` Particulars `

To Bank A/c 8,800 By WIP Control A/c 8,8008,800 8,800

Selling and Distribution Overheads Control A/cParticulars ` Particulars `

To Bank A/c 6,000 By Cost of Sales A/c 6,0006,000 6,000

Finished Stock Ledger Control A/cParticulars ` Particulars `

To WIP Control A/c 60,000 By Cost of Sales A/c 60,00060,000 60,000


To Cost of Sales A/c 85,000 By Bank A/c 85,00085,000 85,000


To Finished Stock Ledger By Sales A/c 85,000Control A/c 60,000To Selling and DistributionOverhead Control A/c 6,000To Profit and Loss A/c 19,000

85,000 85,000


Bank A/cParticulars ` Particulars `

To Sales A/c 85,000 By Wages Control A/c 33,600By Factory OverheadControl A/c 13,000By Administration OverheadControl A/c 8,800By Selling and DistributionOverhead Control A/c 6,000By Balance c/d 23,600

85,000 85,000

Creditors A/cParticulars ` Particulars `

To Balance c/d 29,600 By Stores Control A/c 29,60029,600 29,600

Trial Balance as on......Particulars Debit ` Credit `

Stores Control A/c 4,000WIP Control A/c 21,000Bank A/c 23,600Creditors A/c 29,600Profit and Loss A/c – 19,000

48,600 48,60012. A Ltd. following non-integrated system of Accounting. Following is the Trial Balance as on

01.01-2015:Particulars Debit ` Credit `

Stores Ledger Control A/c. 2,50,000Work in Progress Control A/c. 2,00,000Finished Goods Control A/c. 3,50,000Financial Ledger Control A/c. 8,00,000

Total: 8,00,000 8,00,000Following were the transaction during the month of January:

`Materials Purchased 7,50,000Materials Issued to : Production 3,00,000

Factory 40,000Office 10,000Total Wages Paid 3,00,000

Direct Wages Charged to Production 2,50,000Indirect Wages 50,000Office Overheads Applied to Finished Goods 30,000Selling and Distribution Overheads Incurred 38,000Factory overheads charged to Production @ 35% of Direct Wages:Finished Goods Produced 8,00,000Cost of Finished Goods Sold 10,00,000Sales 12,00,000Prepare the following accounts for the Month:

(a) Stores Ledger Control A/c.(b) Work in Progress Control A/c.(c) Finished Goods Ledger Control A/c.(d) Financial Ledger Control A/c.


(e) Factory Overhead Control A/c.(f) Office Overhead Control A/c.(g) Selling and Distribution Overhead Control A/c.(h) Profit and Loss A/c.

Solution:In the books of A Ltd.

Store Ledger Control A/c.Particulars Amount ` Particulars Amount `

To Bal. B/d. 2,50,000 By WIP Control A/c 3,00,000To Finance Ledger 7,50,000 By Factory OverheadControl A/c By Control A/c. 40,000

By Office Overhead Control A/c. 10,000By Bal c/d. 6,50,000

10,00,000 10,00,000

Finished Goods control A/c. (FGC)Particulars ` Particulars `

To Bal. b/d 3,50,000 By Cost of Sales A/c. 10,00,000To WIP Control 8,00,000 By Bal. c/d. 1,88,000To Office Overhead Control A/c. 38,000

11,88,000 11,88,000

WIP Control A/c.Particulars ` Particulars `

To Bal b/d 2,00,000 By Finished GoodsControl A/c. 8,00,000

To Stores Ledger 3,00,000 By Bal. c/d. 37,500Control A/c.To Wages A/c. 2,50,000To Factory Overhead Control A/c. 87,500

8,37,500 8,37,500

Factory Overhead Control A/c.Particulars ` Particulars `

To SLC A/c 40,000 By WIP Control A/c. 87,500To Wages A/c. 50,000 By P/L A/c. 2,500

90,000 90,000

Office Overhead Control A/c.Particulars ` Particulars `

To SLC A/c. 10,000 By Finished Goods Control A/c. 38,000To Financial Ledger Control A/c. 30,000 By P/L A/c. 2,000

40,000 40,000

Selling and Distribution Overhead Control A/c.Particulars ` Particulars `

To FLC A/c. 30,000 By Cost of Sales A/c. 31,000To P/L A/c. 1,000

31,000 31,000


Financial Ledger Control A/c.Particulars ` Particulars `

To Sales A/c. 12,00,000 By Bal. B/d. 8,00,000To Bal. c/d. 8,75,500 By SLC A/c. 7,50,000

By Wages A/c. 3,00,000By Office O/H Control A/c. 30,000By S & D Overhead Control A/c. 30,000By P/L A/c. 1,65,500

20,75,500 20,75,500

P/L A/c.Particulars ` Particulars `

To Cost of Sales A/c. 10,31,000 By Sales A/c. 12,00,000To Factory Overheads 2,500 By S & D Overhead Control A/c. 1,000To Office O/H Control A/c. 2,000Net Profit 1,65,500

12,01,000 12,01,000

13. Octaga Ltd. maintain Integrated Accounts of Cost and Financial Accounts. From the followingdetails write up control accounts in the general ledger of the factory and prepare a Trial Balance:

Particulars `Share Capital 30,00,000Reserves 20,00,000Sundry Creditors 50,00,000Plant and Machinery 57,50,000Sundry Debtors 20,00,000Closing Stock 15,00,000Cash and Bank Balances 7,50,000

Transaction During the YearParticulars `

Stores Purchased 1,00,000Stores issued to production 1,05,00,000Stores in hand 9,50,000Direct wages incurred 65,00,000Direct wages charged to production 60,00,000Manufacturing expenses incurred 30,00,000Manufacturing expenses charge to production 27,50,000Selling & distribution expenses 10,00,000Finished stock production (at cost) 1,80,00,000Sales 2,20,00,000Closing Stock 9,50,000Payment to creditors 1,10,00,000Receipts from debtors 2,10,00,000


Solution:General ledger of Octaga Ltd.

Stores ledger control A/cParticulars ` Particulars `

To Balance b/d 15,00,000 By WIP control A/c 1,05,00,000To Trade Creditors 1,00,00,000 By Production OH Control A/c 50,000

By Bal. c/d 9,50,0001,15,00,000 1,15,00,000

(Production) Manufacturing Overhead Control A/cParticulars ` Particulars `

To Stock Control A/c 50,000 By WIP Control A/c 27,50,000To Bank A/c 30,00,000 By Closing P/L A/c 8,00,000To Wages Control A/c 5,00,000

35,50,000 35,50,000

Work in Progress Control A/cParticulars ` Particulars `

To Stores Ledger Control A/c 1,05,00,000 By Finished Stock Control A/c 1,80,00,000To Wages Control A/c 60,00,000 By Bal. c/d 12,50,000To Manufacturing Overhead ControlA/c

27,50,000

1,92,50,000 1,92,50,000


To Bank A/c 65,00,000 By WIP Control A/c 60,00,000By Production Overhead A/c 5,00,000

65,00,000 65,00,000

Finished Stock Control A/cParticulars ` Particulars `

To WIP Control A/c 1,80,00,000 By Cost of Sales A/c 1,70,50,000By Bal. c/d 9,50,000

1,80,00,000 1,80,00,000

Selling & Distribution Overhead Control A/cParticulars ` Particulars `

To Bank 10,00,000 By Cost of Sales A/c 10,00,00010,00,000 10,00,000


To Finished Stock Control A/c 1,70,50,000 By Costing P/L A/c 1,80,50,000To Selling & Dis OH Control A/c 10,00,000

1,80,50,000 1,80,50,000


To Bal. c/d 2,20,00,000 By Trade Debtors 2,20,00,0002,20,00,000 By Bal. b/d 2,20,00,000

2,20,00,000


Bank A/cParticulars ` Particulars `

To Bal. B/d 7,50,000 By Wages Control A/c 65,00,000By Manufacturing

Trade Debtors A/c 2,10,00,000 By OH Control A/c 30,00,000By Selling & Dis OH 10,00,000By Control A/cBy Trade Creditors A/c 1,10,00,000By Ba/.c/d 2,50,000

2,17,50,000 2,17,50,000To Bal. b/d 2,50,000

Trade Debtors A/cParticulars ` Particulars `

To Bank A/c 20,00,000 By Bank 2,10,00,000To Sales A/c 2,20,00,000 By Bal. c/d 30,00,000

2,40,00,000 2,40,00,000To Bal. b/d 30,00,000

Trade Creditors A/cParticulars ` Particulars `

To Bank A/c 1,10,00,000 By Bal. b/d 50,00,000By Bal. c/d 40,00,000 By Stores Ledger Control A/c 1,00,00,000

1,50,00,000 1,50,00,000

Share Capital A/cParticulars ` Particulars `

By Bal. c/d 30,00,000 By Bal. b/d 30,00,00030,00,000 30,00,000

Plant & Machinery A/cParticulars ` Particulars `

By Bal. b/d 57,50,000 By Bal. c/d 57,50,00057,50,000 57,50,000

By Bal. b/d 57,50,000

Reserves A/cParticulars ` Particulars `

By Bal. c/d 51,50,000 By Bal. b/d 20,00,000By Costing P/L A/c 31,50,000

51,50,000 51,50,000By Bal. b/d 51,50,000

Trial Balance As on ............


Share Capital 30,00,000Reserves 51,50,000S. Creditors 40,00,000Plant & Machinery 57,50,000S. Debtors 30,00,000Closing Stock of finished goods 9,50,000Stores Ledger Control A/c 9,50,000Closing WIP 12,50,000


Bank and Cash Balance 2,50,0001,21,50,000 1,21,50,000

Costing P/L A/cParticulars ` Particulars `

To Cost of Sales A/c 1,80,50,000 By Sales 2,20,00,000To Mfg. Overhead Control A/c 8,00,000To Net Profit transferred to Reserve A.c 31,50,000

2,20,00,000 2,20,00,00018. As on 31st March 2015 following Balances existed in Sharad Co. Ltd.’s Cost Ledger.

Particulars Dr. ` Cr. `Stores Ledger Control Account 6,02,870 –Work in Progress Control Account 2,44,730 –Finished Stock Ledger Control Account 5,03,890 –Manufacturing Overhead Control Account – 21,050Manufacturing Overhead Control Account – 13,30,440Cost Ledger Control Account 13,51,490 13,51,490

During the next three months following items arose:`

Finished Product (At cost) 4,21,670Manufacturing Overhead Incurred 1,83,020Raw material Purchased 2,46,000Factory Wages 1,01,060Indirect labour 43,330Cost of Sales 3,71,780Material issued to production 2,54,630Sales Return (At Cost) 10,760Material Returned to Suppliers 5,800Manufacturing Overhead Changes to Production 1,54,400You are required to write up:

(a) Cost Ledger Control Account(b) Stores Ledger Control Account(c) Overhead Control Account(d) Work-in-Progress Control Account(e) Finished Stock Ledger Control Account(g) Cost of Sales A/c (April 2006)

Solution:In the Books of Sharad Co. Ltd.

Cost Ledger Control A/c


To Stores Ledger By Bal. b/d 13,30,440Control A/c (Returns) 5,800 By Stores Ledge Control A/c 2,46,000To Cost of Sales A/c (Sales) 3,71,780 By Overhead Control A/c

(Overhead incurred) 1,83,020To Balance c/d 15,37,030 By WIP Control A/c


(Direct Wages) 1,01,06.0By Overhead Control A/c(Indirect Wages) 43,330By Finished Stock Ledger A/c (Returns) 10,760

19,14,610 19,14,610

Stores Ledger Control (SLC)A/cParticulars ` Particulars `

To Balance b/d 6,02,870 By WIP LedgerTo Cost Ledger Control A/c 2,46,000 Control A/c (Issues) 2,54,630

By Cost Ledger Control A/c (Returns) 5,800By Balance c/d 5,88,440

8,48,870 8,48,870

Overhead Control A/cParticulars ` Particulars `

To Cost Ledger Control A/c(Overhead incurred) 1,83,020

By Balance b/d 21,050

To Cost Ledger Control A/c(Indirect labour) 43,330

By WIP Ledger Control A/c(Charged) 1,54,400By Bal. c/d 50,900

2,26,350 2,26,350

Work-in-Progress Control A/c


To Bal. b/d 2,44,730 By Finished Stock Ledger A/cTo Cost Ledger Control A/c 2,46,000 Control A/c (Production) 4,21,670(Factory Wages) 1,01,060 By Bal. c/d 3,33,150To Stores Ledger Control A/c(Materials)

2,54,630

To Overhead Control A/c(Overhead Charges)

1,54,400

7,54,820 7,54,820

Finished Stock Ledger Control A/c


To Bal. b/d 5,03,890 By Cost of Sales A/c 3,71,780To WIP Control A/c (Production) 4,21,670 By Balance c/d 5,64,540To Cost Ledger Control A/c (Returns) 10,760

9,36,320 9,36,320

Trial Balance as on 30 th June 2015Particulars Amount Dr. ` Amount Cr. `

1. Stores Ledger Control A/c 5,88,4402. Overhead Control A/c 50,9003. WIP Ledger A/c 3,33,1504. Finished Stock Ledger A/c 5,64,5405. Cost Ledger Control A/c 15,37,030

15,37,030 15,37,030


(g) Cost of Sales A/cParticulars ` Particulars `

Finished StockLedger Control (Sales) 3,17,780

By Cost Ledger Control A/c(Sales) 3,71,780

3,71,780 3,71,78019. On 31st March 2015 the following were extracted from the books of Turf and Surf Company.


Stores Ledger Control A/c 3,50,000Work-in-progress A/c 3,80,000

Finished Goods Control A/c 2,50,000Cost Ledger Control A/c 9,80,000

9,80,000 9,80,000

The following transaction took place in March, 2015:`

Raw Materials: Purchased 9,50,000Returned to Suppliers 30,000Issued to production 9,80,000

Returned to stores 30,000Production Wages 4,00,000Indirect Labour 2,50,000Factory Overhead 5,00,000Selling and Distinction Overheads 4,00,000Cost of Finished goods transfer to warehouse 21,30,000Cost of goods sold 21,00,000Sales 30,00,000Factory Overhead are applied to production at 15% of Direct Wages, any under/over absorbed

overhead being carried forward for adjustment in the subsequent months. All selling and distributionoverhead are treated as period cost and, are charged off to the Profit and Loss Account of the month inwhich they incurred.

Show the necessary Control Accounts, Costing Profit and Loss of A/c and the trial Balances.(Oct. 2005)

Solution:Dr. Cost Ledger Control A/c Cr.

Particulars ` Particulars `To Costing P/L A/c (Sale) 30,00,000 To Bal. b/d 9,80,000To Stores Ledger By Stores Ledger Control A/c 9,50,000Control A/c 30,000 By Wages Control A/cTo Bal. c/d 9,50,000 (Productive + Indirect wages) 6,50,000

By Factory OH Control A/c 5,00,000By Selling & Adm. OH Exp. 4,00,000By Costing P/L A/c 5,00,000

39,80,000 39,80,000

Dr. Stores Ledger Control A/c Cr.Particulars ` Particulars `

To Bal. b/d 3,50,000 By Cost Ledger A/c 30,000


To Cost Ledger Control A/c 9,50,000 By WIP Control A/c 9,80,000To WIP Control A/c 30,000 By Balance c/d 3,20,000

13,30,000 13,30,000

Dr. WIP Control A/c Cr.Particulars ` Particulars `

To Bal. b/d 3,80,000 By Stores Ledger A/c 30,000To Stores Ledger Control A/c 9,80,000 By Finished Goods A/c 21,30,000To Wages Control A/c 4,00,000 By Bal. c/d 2,00,000To Factory OH Control A/c 6,00,000

23,60,000 23,60,000

Dr. Finished Goods Control A/c Cr.Particulars ` Particulars `

To Bal. b/d 2,50,000 By Cost of Goods b/d A/c 21,00,000

To WIP Control A/c 21,30,000 By Balance c/d 2,80,00023,80,000 23,80,000

Dr. Factory Overhead Control A/c Cr.Particulars ` Particulars `

To Wages Control A/c By WIP A/c 6,00,000(Indirect labour) 2,50,000 By Bal. c/d 1,50,000To Cost Ledger Control A/c 5,00,000

7,50,000 7,50,000

Dr. Costing P/L A/c Cr.Particulars ` Particulars `

To Cost of Goods Sold 21,00,000 By Cost Ledger 30,00,000To Selling & Adm. OH A/c 4,00,000To Cost Ledger Control A/c 5,00,000(Costing Profit)

30,00,000 30,00,000

Dr. Wages Control A/c Cr.Particulars ` Particulars `

To Cost Ledger Control A/c 6,50,000 By WIP Control A/c 4,00,000By Factory OH Control A/c 2,50,000

6,50,000 6,50,000

Dr. Cost of Goods Sold A/c Cr.Particulars ` Particulars `

To Finished Goods A/c 21,00,000 By Costing P/L A/c 21,00,00021,00,000 21,00,000

Dr. Selling & Adm. OH A/c Cr.Particulars ` Particulars `

To Cost Ledger Control A/c 4,00,000 By Cost P/L A/c 4,00,0004,00,000 4,00,000

Trial Balance as on 31st March 2010Particulars Dr. ` Cr. `

Stores Ledger Control A/c 3,20,000WIP Control A/c 2,00,000Finished Goods Control A/c 2,80,000Factory OH Control A/c 1,50,000


Cost Ledger Control A/c 9,50,0009,50,000 9,50,000

20. Costman Ltd. maintains separate set of books for financial accounts and cost accounts. Thefollowing information is furnished for the year 2009.

Material Control A/c 60,000Work-in-Progress Control A/c 90,000Finished Goods Control A/c 1,40,000Cost Ledger Control A/c 2,90,000Transactions for the year are:

Material purchased 6,60,000Materials issued as:

Direct materials 4,50,000Indirect materials 1,20,000

Wages paid allocated as:Direct cost 2,70,000Indirect cost 90,000

Production expenses 2,40,000Value of finished goods produced 10,80,00Closing Stock of Finished goods 1,20,000Administration expenses 2,40,000Selling expenses 1,80,000Sales 18,00,000Prepare the necessary control accounts in books of costing records. (Oct. 2004)

Solution:In the Books of Costman Ltd.

Cost Ledger Control A/cParticulars ` Particulars `

To Closing P/L A/c (Sales) 18,00,000 By Bal. b/d 2,90,000By Material Control A/c 6,60,000By Wages Control A/c(Direct indirect wages)

3,60,000

By Selling & Adm. Exp. 4,20,000By Costing P/L A/c 2,80,000

4,50,000 By Factory overhead control A/c 2,40,00022,50,000 22,50,000

By Bal. b/d 4,50,000

Material Control A/cParticulars ` Particulars `

By WIP Control A/cTo Bal. b/d 60,000 DM 4,50,000

Ind. Material 1,20,000 5,70,00To Cost Ledger Control A/c 6,60,000 By Bal. c/d 1,50,00

7,20,000 7,20,000


WIP Control A/cParticulars ` Particulars `

To Bal. b/d 90,000 By Finished Goods A/c 10,80,000To Material Control A/c 5,70,000 By Bal. c/d 1,80,000To Wages Control A/c 2,70,000To Factory Overhead Control A/c 3,30,000

12,60,000 12,60,000


To Bal. b/d 1,40,000 By Cost of sales (Bal. fig) 11,00,000To WIP 10,80,000 By Bal. c/d 1,20,000

12,20,000 12,20,000

Factory Overhead Control A/c


To Wages Control A/c (Indirect cost) 90,000 By WIP 3,30,000To Cost Ledger Control A/c (Productive wages) 2,40,000

3,30,000 3,30,000

Costing P/L A/c


To Cost of Sales 11,00,000 By Cost Ledger Control A/c 18,00,000To Ad. off 4,20,000To Cost Ledger Control A/c(Costing Profit)

2,80,000

18,00,000 18,00,000

Trial Balance

Particulars Dr. ` Cr. `

Cost Ledger Control A/c 4,50,000Material Control A/c 1,50,000WIP Control A/c 1,80,000Finished Goods Control A/c 1,20,000

4,50,000 4,50,000

Theory Questions1. What are the principles of Integrated System of Accounting?2. What are the advantages of Integrated System of Accounting?3. What are the features of Integrated Accounts?4. Explain the disadvantages of Integrated Accounts?5. What do you mean by non-integrated accounts?6. What is importance of control accounts?7. What are advantage types of cost ledger?


Practical Problem1. Cost Ledger of Beta Ltd. shows the following balance as on 31st March, 2015.

Particulars Dr. ` Cr. `

Stores Ledger Control A/c 6,02,870 –Work-in-Progress 2,44,730 –Finished Stock Ledger Control A/c 5,03,890 –Manufacturing Overhead Control A/c – 21,050Cost Ledger Control A/c – 13,30,440

13,51,490 13,51,490

During the next three months, the following items arose:Particulars `

Finished Product (at cost) 4,21,670Manufacturing Overhead incurred 1,83,020Raw Materials purchase 2,46,000Factory Wages 1,01,060Indirect Labour 43,330Cost of Sales 3,71,780Materials issued to Production 2,54,630Sales returned at cost 10,760Materials returned to suppliers 5,800Manufacturing Overhead charged to production 1,54,400

You are required to write up the accounts and schedule the balance stating what each balancerepresents.

2. On 31st March, 2015, the following balances were extracted from the books of the SupremeManufacturing Company.

Particulars Dr. ` Cr. `Stores Ledger Control A/c 35,000 –Work-in-Progress 38,000 –Finished Goods Control A/c 25,000 –Cost Ledger Control A/c – 98,000

98,000 98,000The following transactions took place in April, 2015.

Particulars `Raw Materials:

Purchased 95,000Returned to Suppliers 3,000Issued to Production 98,000Returned to Stores 3,000

Productive Wages 40,000Indirect Labour 25,000Factory Overheads Expenses incurred 50,000Selling & Administrative Expenses 40,000Cost of Finished Goods Transferred to Warehouse 2,13,000Cost of Goods sold 2,10,000Sales 3,00,000

Factory overheads are applied to production at 150% of direct wages, any under/over absorbedoverhead being carried forward for adjustment in the subsequent months. All administrative and sellingexpenses are treated as period cost and charged off to the Profit & Loss Account of the month in which theyare incurred.


Show the following accounts:(a) Cost Ledger Control Account.(b) Stores Ledger Control Account.(c) Work-in-Progress Control Account.(d) Finished Goods Stock Control Account(e) Factory Overhead Control Account(f) Costing Profit & Loss Account(g) Trial Balance as at 30th April, 2010.

Ans.: Balance: (a) ` 95,000. (b) ` 32,000. (c) ` 20,000. (d) ` 28,000 (e) ` 15,000. (f) ` 50,000 (Profit).(g) Trial Balance ` 95,000

3. Dickensons & Co. Supplies you the following cost ledger balance as on 1st January, 2015.Particulars Dr. ` Cr. `

Stores Control A/c 8,500 –Work-in-progress A/c 6,500 –Finished Goods A/c 7,100 –Cost Ledger Control A/c – 22,000Works Overhead A/c – 100

22,100 22,100Transactions during the year 2015 were as follows.

Particulars `Purchases 40,000Stores Issued:

Production 38,000Works Repairs 1,000

Wages:Productive 45,000Unproductive 4,500

Works Repairs 800Works Expenses (Rent, Light etc.) 15,000Works Overhead Recovered 21,000Administration Expenses 4,500Administrative Overhead Recovered 5,000Goods Sold 1,30,000Finished Goods in Stock on 31st December, 2015 5,000Work-in-progress on 31st December, 2015 3,100

You are required to write up the cost books (in a summarised method) and prepare Profit & LossAccount.

4. Acme Manufacturing Co. Ltd. opens the costing records, with the balance as on 1st July, 2004 asfollows:

Particulars Dr. ` Cr. `Material Control A/c 1,24,000Work-in-progress A/c 62,500Finished Goods A/c 1,24,000Production Overhead A/c 8,400Administration Overhead 12,000Selling and Distribution Overhead A/c 6,250General Ledger Control A/c – 3,13,150

3,25,150 3,25,150


The following are the transactions for the quarter ended 30th September, 2004.Particulars `

Materials purchased 4,80,100Materials issued to jobs 4,77,400Materials to Work Maintenance 41,200Materials to Administration Office 3,400Materials to Selling Department 7,200Wages:

Direct 1,49,300Indirect 65,000

Transportation for Income Materials 8,400Production Overheads 2,42,250Absorbed Overheads Production 3,59,100Administration Overheads 74,000Administration Allocation to Production 52,900Administration Allocation to Sales 14,800Sales Overheads 64,200Sales Overheads absorbed 82,000Finished Goods produced 9,58,400Finished Goods sold 9,77,300Sales Realisation 14,43,000

Make up the various accounts as you eavisage in the Cost Ledger and prepare a Trial Balance as at30th September, 2004.

Ans: General Ledger Adjustment ` 3,68,900. Stock Ledger Control ` 74,900. Production Overhead` 6,150. Work-in-progress ` 1,42,800. Administration Overheads ` 2,300. Finished GoodsLedger Control ` 1,05,100. Selling & Distribution Overheads ` 4,350. Cost of Sales ` 10,74,100.Net Profit ` 3,68,900. Trial Balance ` 3,28,950

5. The cost ledger of a company shows the following.Particulars Dr. ` Cr. `

Work-in-progress Control A/c 7,840Finished Stock Ledger Control A/c 5,860Works Overhead Suspense A/c 400Office & Administration Overhead Suspense A/c 200Stores Ledger Control A/c 10,500General Adjustment A/c 24,800

Transactions for the year 2004 were.Particulars `

Wages (Direct Labour) 61,200Wages (Indirect Labour) 2,800Works Overhead Allocated to production 18,700Office & Administration Overhead allocated 6,200Stores issued to production 39,300Goods finished during the year 1,20,000Finished Goods sold (no stock were left at the year end) 1,32,000Stores purchased 36,000Stores issued to Factory Repair Orders 1,500Carriage Inwards on Stores issued for production 600Work Expenses 14,000Office & Administration Expenses 6,000

You are required to.(a) Write up the cost ledger accounts recording the above transaction and make necessary transfers to

control accounts.


(b) Prepare the Trial Balance as on 31st December, 2004.Ans: General Ledger Adjustment ` 13,340. Stock Ledger Control A/c ` 5,700. Wages Control

` 2,800. Work-in-progress ` 7,640. Trial Balance ` 13,3406. A company operates interlocking financial and cost accounting book-keeping systems. The

following balance and data relate to the Cost Ledger.Particulars Dr. ` Cr. `

General Ledger Adjustment A/c 2,42,830Work-in-progress Control A/c 1,06,520Stores Control A/c 93,180Furnished Goods Control A/c 43,130

2,42,830 2,42,830The following information is extracted.

Particulars `Raw Material Purchases 4,12,860Direct Labour 2,04,440Indirect Labour 61,350Special Purchases of Raw Materials 1,070Office Expense incurred 1,63,190Production Expenses incurred 86,800Selling and Distribution Expenses incurred 1,03,740Stores Issues of:

Production 3,62,910Factory Maintenance 29,580Office Maintenance 13,070

Production Overhead recovered 1,98,000Administration Overhead recovered by Finished Goods 1,72,000Selling & Distribution Overheads recovered by Sales 1,01,0000Factory Cost of Finished Goods 7,82,800Cost of Finished Goods sold 9,25,000Sales 14,36,500

You are required to write up all the necessary accounts. Prepare the Costing Profit & Loss Accountand give the closing Trial Balance.

Ans: Profit ` 4,23,770. General Ledger Adjustment A/c ` 2,63,550 (Cr.) Stores Control A/c` 1,00,480. Work-in-progress Control A/c ` 90,140. Finished Goods A/c ` 72,930

9.The Neha Manufacturing Ltd., opens the costing records with the balances, as on 1st January, 2015as follows.

(` in ’000)Particulars Dr. ` Cr. `

Stores Ledger Control A/c 2,480Work-in-progress Ledger Control A/c 1,250Finished Goods Ledger Control A/c 2,480Production Overheads A/c 168Administration Overheads A/c – 240Selling & Distribution Overheads A/c 125General Ledger Adjustment A/c – 6,263

6,503 6,503The following are the transactions for the year ended 31st December, 2015.

(` in’000)Particulars `

Material purchased 9,602Material issued to Jobs 9,548


Material to Work Maintenance 824Material to Administration Offices 68Material to Selling Office 144Wages:

Productive 2,986Non-productive 1,300

Transportation Expenses for Incoming Materials 168Production Overheads incurred 4,845Absorbed Overheads Production 7,182Administrative Overheads incurred 1,480Administrative Overheads absorbed to Finished Goods 1,354Sales Overheads incurred 1,284Sales Overheads absorbed 1,640Finished Goods produced 19,168Finish Goods sold 19,842Sales Realisation 24,860

Make up the various accounts as you envisage in the cost ledger and prepare a Trial Balance on 31st

December, 2015.(Ans: Trial Balance Total ` 65,79,000)

cost accounting · 1. helps in ascertainment of cost: cost accounting helps in the ascertainment of...

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