PROF. BHAMBWANI’SRELIABLE CLASSES

TYBCOM (CHAPTER WISE) RECORDING WORD FILERECONCILATION

LEC 1:THEORY (47 MINS)

LEC 2: (10 MINS)From the following particulars, prepare Reconciliation Statement and Ascertain CostingProfit/Loss. Net profit as per financial P & L A/c Rs. 50,000, Opening stock was overvalued by Rs. 2,000 in Cost Accounts as compared to financial accounts. Administrative overheads charged in Financial Cost Accounts as compared to financial accounts. Administrative overheads charged in Financial Books Rs. 20,000 but recovered in Cost Rs. 40,000. Income Tax Provision Rs. 1,200. Notional Salary of Proprietor in Cost Rs.20,000. Interest Received Rs.12,000, Closing stock as per financial books Rs.16,200, where as in cost books it was Rs.19,000.

LEC 3: (7 MINS)From the following, prepare Reconciliation Statement of M/s. XYZ and Company as on 30-6-2004:1. Net profit as per Financial Accounts Rs.40,340.2. Income Tax provision made Rs.30,0003. Materials Purchases of 5,000 units were recorded in cost at standard cost Rs.24 per unit

whereas in finance it was recorded at actual cost Rs.22 per unit.4. Old Bad debts recovered Rs.20,500.5. Loss on sale of furniture was Rs.4,120

LEC 4: (30 MINS) The net profit of a company amounted to Rs. 60,412 for the year ending 31st December, 1997 as per its

financial records. The cost records, however, revealed a different figure. A scrutiny of the two sets of accounts disclosed the following facts:(a) Works 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 overhead 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:

Interest on Bank Loan 1,600Bank charges 160Directors fees 750Penalty due to late completion on contract

2,500

(g) Gains during the year not included in Cost Accounts:Transfer fees 45Profit on sale of investment 4,250Interest on investments 9,450

(h) The following appropriations had been made arriving at the profit figure Rs.60,412, given below :

Transfer to Dividend Equalisation Fund 10,500Transfer to Income Tax Reserve 6,400Transfer to Debenture Redemption Fund 9,000

(i) A sum of Rs.10,000 given as donation to the Prime Minister Relief Fund had been charged to Profit and Loss account as business expenses.Prepare Reconciliation Statement and find the amount of net profit/loss as per the costing records.

LEC 5: (36 MINS)In the factory of Perfect Limited, two types of products namely "X" and "Y" are manufactured.From the following particulars, prepare a statement showing total cost per unit, profit per unit sold and the total profit of the company as per the cost records. There was no opening or closing stock.

Product XRs.

Product YRs.

Raw materials consumed Direct Labour Selling and Distribution expenses

9,720 9,000

15

16,36813,200

20

(per unit sold)

Works on cost is charged at 80% of Direct Labour and office on cost is charged at 60% of works on cost.The products sold during the period are as under:

a) 180 units of "x" at Rs.200 per unit

b) 220 units of "y" at Rs.260 per unitAlso prepare profit and loss account for the period as per financial books. The actual works expenses being Rs.19,000 office expenses Rs.6,300;selling and distribution expenses Rs.7,100.Also prepare a reconciliation statement reconciling the profit or loss as per cost records with that of financial records.

LEC 6: (37 MINS)The following is the Trading and Profit and Loss Account of a Manufacturing Company for theyear ending on 31st December,1983:

Trading and Profit and Loss A/cRs. Rs.

To Opening stock 100 units at Prime Cost To Materials To Wages To Work Overheads To selling and Distribution Overheads To Net Profit

400 3,000 2,000 2,200

800 1,800

By Sales (2,400 Units) By Closing Stock (200 units)

9,600 600

10,200 10,200Factory overheads are charged at 40% of Prime Cost, Selling expenses are charged at Rs.0.30 per unit sold. Prepare a cost sheet and a reconciliation statement.

LEC 7: (1 HOUR)Modern Company Limited furnishes the summary of Trading and Profit & Loss Account for theyear ended 31st December 1989:

Rs. Rs.To Raw materials To Direct Wages To Productive Overheads To Administration Overheads To Selling and Distribution Overheads To Preliminary Exps. Written off To Goodwill written off To Dividend (net) To income Tax To Net Profit

1,39,600 76,200 42,600 39,100 42,700

2,200 2,501 3,000 4,1001,89,994

By Sales (12,000 units)4,By Finished Stock (200 Units) By Work-in-progress: Materials 28,200 Wages 11,796 production overheads 7,999By Interest on Securities (Gross)

4,80,000

8,000

47,995 6,000

5,41,995 5,41,995The company manufactures a Standard Unit, scrutiny of cost records for the same period show that:

a) Factory Overheads have been allocated to the production at 20% on Prime Cost.b) Administration Overheads have been charged at Rs.3 per Unit on Units produced.c) Selling & Distribution expenses have been charged at Rs.4 per Unit on units sold.

You are required to prepare a statement of cost to work out profit as per cost accounts and reconcile the same with that shown in the Financial Accounts.

LEC 8: (30 MINS)From the following details of KT & Co. compute profit as per P & L A/c as well as, as per costsheet and reconcile profit between cost sheet and P & L A/c showing clearly the reasons for the variations of the two profit figures.

Particulars Rs.Sales 20,000Purchase of material 3,000Closing stock of material 500Direct wages 1,000Indirect wages 500Indirect factory expenses 2,000Bad debts 100Interest on overdraft 50

Profit on sale of assets 1,000Selling expenses 2,000Distribution expenses 1,000

In cost sheet manufacturing overheads recovered at 300% of direct wages, selling overheads recovered Rs.1,500 and distribution overheads recovered Rs. 700.

LEC 9: (29 MINS)Following is the Trading and Profit and loss Account of M/s Vishal Enterprises for the year ended

31-3-2006.Particulars Rs. Particulars Rs.To Opening Stock (500 units)

17,500 By Sales (10250 Units)

7,17,500

To Materials 2,60,000 By Closing Stock (250 units)

12,500

To Wages 1,50,000To Factory Overheads 94,750To Gross Profit c/fd 2,07,750

7,30,000 7,30,000To Administrative Overheads

1,06,000 By Gross Profit c/d 2,07,750

To Selling Overheads 55,000 By Dividend Received on Investments

10,250

To Loss on Revaluation of Assets

9,000

To Net Profit 48,000Total 2,18,000 2,18,000

In Cost Accounts, materials charged @Rs.25/- per unit and wages @ Rs.15/- per unit. Factory overheads taken @60% of wages. Administrative overheads applied @20% of works cost. Selling overheads taken @ Rs.6 per unit sold.You are required to prepare

(a) Statement of Cost showing total cost and cost per unit(b) Statement of Reconciliation of Profit/Loss

LEC 10: THEORY (20 MINS)

LEC 11: (PART 1) (14 MINS)From the accounts of ABC Co. Ltd., the Manufacturing, Trading and Profit and Loss Accounts are

reproduced below:Rs. Rs.

To Raw Materials:To Opening Stock To purchases To wages

To works Expenses

29,5001,86,5002,98,000

1,90,750

By Work in Progress:Materials 4,000Wages 5,500Works Expenses 3,300By Cost of Goods Manufactured By Closing stock of Raw materials

12,800

6,59,950

32,0007,04,750 7,04,750

To Cost of Goods sold To Administration Exp. To Selling & Distribution Expenses To Bad Debts written off To Net Profit transfer to Appropriation A/c

6,59,9501,22,500

1,64,000 17,500

72,450

By Sales (7,600 Units) By Finished Stocks (1,400 units) By Interest on Investments

9,12,0001,17,600

6,800

10,36,400 10,36,400

The following information is also available:a) Accrued wages of Rs.17,000 included in wagesb) Works expenses are allocated to production at 60% of direct labour costc) Administrative expenses are allocated at Rs.12 per unit of Productiond) Selling and distribution expenses are allocated so as to work out to 20% of selling price.

Prepare Costing Profit and Loss Account and a statement of Reconciliation between the two accounts.

LEC 12: (PART 2) (CONTINUE SOLUTION OF LEC 11) (38 MINS)

LEC 13: (38 MINS)Following is the Trading and Profit and Loss account of a Manufacturer specialist in Producing aProduct.

Trading Profit and Loss accountParticulars Amount Particulars Amount

To Materials To Wages To Factory Expenses

2,91,5001,86,1001,40,550

By Sales By Stock of By Work In Progress

7,50,000 18,125

To Gross Profit c/d 2,05,275 Material 28,000Wages 15,600Factory exp. 11,700 55,300

8,23,425To Administration expensesTo Net Profit

1,36,500 68,775

By Gross Profit 2,05,275

2,05,275 2,05,275

1,550 Patented articles were produced and 1,500 were sold during the year. The costing records showed that factory expenses worked out at Rs 82.50 and administrative expenses at Rs 90.625 Per article produced. The cost accounts show a profit of Rs 70,312.50 for the year.

Prepare costing Profit and loss account and a statement profit as per cost records and financial records.

LEC 14: (39 MINS)The Following is the summary of trading and profit and loss account for the year ended 30 th

June 1994.To Stock of finished goodsTo Purchases 2,05,000 Less Returns 2,500 To Wages To Factory expenses To Depreciation on plant To Gross Profit c/d

7,500

2,02,500 63,750 15,750 18,300

1,77,450

By sales By Stock of finished goods

4,72,500

12,750

4,85,250 4,85,250To office Expenses To Selling and distribution To Provision for bad debts To Interest on Bank overdraftTo Loss on sale of InvestmentTo Good will written off To Net Profit

32,685 51,330

2,000 705

1,500 4,000 90,855

By Gross ProfitBy Profit on sale of LandBy Interest on Investment

1,77,450

3,750

1,875

1,83,075 1,83,075Stock Valuation is financial accounts is done as under

Opening ClosingMaterial Labour Overheads

4,0502,2501,200

6,9003,6002,250

7,500 12,750In cost accounts

a) Recovery rates were Factory on cost @ 5% of Sales; Selling and distribution on cost @ 12% of Sales; Office overheads Rs 28,000

b) Stock is valued at Prime cost onlyc) Non Cost items should strictly be excluded

Ascertain Profit shown by cost accounts and reconcile the profit as per cost records with that as per financial records.

LEC 15: (45 MINS) Ethusiasts Ltd. Commenced business on 1st April, 1996. Cost and Financial records aremaintained for the year ended 31st March, 1997. From the following information’s preparestatements:(a) Showing the result as per costing records, (b) Showing result as per financial records and (c) Reconciling these results

Particulars As per costingRecords

As per FinancialRecords

Material consumed(20,000 kgs.)Direct Wages(3000 man days)Factory Overheads

Administrative Overhead

Sales overheads

Stock (of output produced)As on 31-03-97 2,000 kgs.Work in Process as on31-03-1997Sales (16,000 kgs)Rent Income

Rs.28.50 per Kg.

Rs.80 per man day

20% of the Prime CostRs.30 per Kg. of Output producedRs.50 per Kg. ofOutput soldAt cost of production

Rs.1,62,000

Rs.130 per Kg. ---

Rs.26 per Kg.

Rs.85 per man day

Rs.3,60,000

Rs.4,00,000

Rs.9,60,000

Rs.1,50,000

Rs.1,62,000

Rs.129.50 per Kg.Rs.1,20,000Rs.30,000

Preliminary expenses Written off

---

LEC 16: (46 MINS) Following information has been extracted from the financial records of ‘X’ Ltd. for the year ended 31st March, 1993:

Rs.Opening Stock of Raw material as on 1-4-92Raw Material Purchased during the yearStock of Raw Material as on 31-3-93Wages paid during the yearWork expensesOffice and Administration expensesSelling and Distribution expensesWork in progress as on 31-3-93:

Material 5,000Wages 3,000Works overheads 1,900

Stock of Finished Goods as on 31.3.93 (500 units)Sales (8000 units)Interest and Dividend ReceivedPreliminary Expenses written off

20,000 1,60,000 30,000 80,000 55,000 35,000 45,600

9,900 19,000

4,00,000 1,600 4,500

On going through the costing records, you discover that:a) The factory expenses have been allocated to the production at 25% on prime cost.b) Office and Administrative expenses had been charged at Rs.4/- per unit produced.c) Selling and Distribution expenses have been charged at Rs.5/- per unit sold.

You are required to prepare:i) Trading and Profit and Loss Account as per financial records for the year ended 31 st March

1993.ii) A statement showing costing Profit and Loss of the company for the same period.Reconcile the profits as shown by the financial accounts and as disclosed by cost accounts.

LEC 17: (38 MINS) The following are available from financial accounts for the year ended 31st March, 1994:

Rs.Direct materials consumptionDirect wagesFactory overheadsAdministration overheadsSelling and distribution overheadsBad debtsPreliminary expenses (written off) Legal chargesDividend receivedInterest on deposit received Sales 1,20,000 unitsClosing stock:Finished stock 40,000 unitsWork in progress

2,50,0001,00,0003,80,0002,50,0004,80,000 20,000 10,000 5,000

50,000 10,000

7,00,000

1,20,000 80,000

The cost accounts reveal:Direct materials consumption Rs.2,80,000Factory overhead recovered at 20% on prime cost.Administration overhead at Rs.3 per unit of production.Selling and distribution overhead at Rs.4 per unit sold.Prepare:

(1) Costing profit and loss account.(2) Financial profit and loss account.(3) Statement reconciling the profit disclosed by the costing profit and loss accounts and

financial profit and loss account.