Unit Costing & Reconciliation Answer to Q.1: (Nov, 2003) CA Past Years Exam Answer (i) Closing stock of finished goods Sales Gross profit = Cost of goods sold available closing stock of finished goods 7,50,000 (30% of 7,50,000) = 5,55,775 Closing stock of finished goods Closing stock of finished goods = ` 30,775 (ii) Closing stock of raw material Prime cost Direct labour Direct expenses = Opening stock of raw material + Purchase Closing stock of raw material 3,97,750 2,22,250 Nil = 20,000 + 2,50,000 - Closing stock of raw material Closing stock of raw material = ` 94,500 (iii) Factory overheads Factory overheads = 40% of conversion cost = 40% (Direct labour + Direct expenses + Factory overhead) x = 40% (2,22,250 + Nil + x) Factory overheads = x = ` 1,48,167 Closing stock of Work in progress Prime cost + Factory overhead + Opening WIP Closing WIP + Office Overhead + Opening stock of finished goods = Cost of goods available 3,97,750 + 1,48,167 + 40,000 - x+ Nil + 37,750 = 5,55,775 Closing stock of Work in progress = x = ` 67,892 Answer to Q.2: (May, 2009) Basis Total Black Polish Brown Polish Direct materials - Polish 75,000 1 : 25,000 1.1 2,46,000 1,80,000 66,000 - Tins 75,000 1 : 25,000 1 1,20,000 90,000 30,000 Direct wages 75,000 1 : 25,000 1.08 2,04,000 1,50,000 54,000 Prime cost 5,70,000 4,20,000 1,50,000 Production overheads Direct wages (1,50,000 : 54,000) 3,06,000 2,25,000 81,000 Cost of production of 8,76,000 6,45,000 2,31,000 quantity produced Add: Opening stock of 94,560 20,640 73,920 finished goods (Note- 2) Less: Opening stock of (74,160) (46,440) (27,720) finished goods (Note- 2) Cost of goods sold 8,96,400 6,19,200 2,77,200 Add: Selling overhead 72,000 tins : 30,000 tins 1,02,000 72,000 30,000 Cost of sales 9,98,400 6,91,200 3,07,200 Profit (balancing figure) 2,64,600 1,72,800 91,800 Sales 12,63,000 72,000 12 = 8,64,000 30,000 13.30 =3,99,000 Page No. 1
Note: 1 Quantity produced = Quantity sold + Closing stock Opening stock Black Polish = 72,000 + 5,400 2,400 = 75,000 tins. Brown Polish = 30,000 + 3,000 8,000 = 25,000 tins Note: 2 (Opening stock and Closing stock) Black Polish Quantity produced = 75,000 tins Production cost = ` 6,45,000 Hence, proportionate cost which can be identified with Opening stock ` 6,45, 000 = 2,400 tins = ` 20,640 7,50,000 tins Closing stock ` 6,45, 000 = 5,400 tins = ` 46,440 7,50,000 tins Brown polish Quantity produced = 25,000 tins Production cost = ` 2,31,000 Hence, proportionate cost which can be identified with Opening stock ` 2,31, 000 = 8,000 tins = ` 73,920 25,000 tins Closing stock ` 2,31,000 = 3,000 tins = ` 27,720 25,000 tins Answer to Q.3: (May, 2008) Cost sheet Basis Total Type XD Type XE Direct material (2.70,000 1.6: 3,30,000 1) 38,10,000 21,60,000 16,50,000 Direct wages (2,70,000 1: 3,30,000 0.4) 20,10,000 13,50,000 6,60,000 Prime cost 58,20,000 35,10,000 23,10,000 Production overheads Direct wages (13,50,000 : 6,60,000) 6,03,000 4,05,000 1,98,000 Factory cost 64,23,000 39,15,000 25,08,000 Administration Overhead Factory cost (39,15,000 : 25,08,000) 6,42,300 3,91,500 2,50,800 Cost of production 70,65,300 43,06,500 27,58,800 (+) Opening stock of fin. goods Note 1 3,85,000 2,25,000 1,60,000 (-) Closing stock of fin. goods Note 1 (7,33,150) (3,98,750) (3,34,400) Cost of goods sold 67,17,150 41,32,750 25,84,400 (+) Selling overheads (Note - 2) (` 2 p.u. sold) 11,40,000 5,20,000 6,20,000 Cost of sale (80%) 78,57,150 46,52,750 32,04,400 Profit (20%) 19,64,288 11,63,188 8,01,100 Sales (100%) 98,21,438 58,15,938 40,05,500 Note -1 [Opening stock and Closing stock of finished goods] Product XD Cost of production = ` 43,06,500 (2,70,000 units) Opening stock Quantity = 15,000 units Valuation = 15,000 units ` 15 p.u. (given) = ` 2,25,000 Closing stock Quantity = 25,000 units `43,06,500 Valuation = 25,000 units = ` 3,98,750 2,70,000 units Product XE Cost of production = ` 27,58,800 (3,30,000 units) Opening stock Quantity = 20,000 units Valuation = 20,000 units ` 8 p.u. (given) = ` 1,60,000 Page No. 2
Closing stock Quantity = 40,000 units ` 27,58,800 Valuation = = ` 3,34,400 3,30,000 units Note 2 Quantity sold = Opening stock + Quantity produced Closing stock Type XD = 15,000 + 2,70,000 25,000 = 2,60,000 units. Type XE = 20,000 + 3,30,000 40,000 = 3,10,000 units. Answer to Q.4: (May, 2010) Assume, Present cost = ` x Present profit = ` y Hence, x+ y = ` 3,000 (Equation 1) Type of cost Present cost Future cost Material 0.5x 0.5x plus 20% = 0.6x Labour 0.3x 0.3x plus 10% = 0.33x Overheads 0.2x 0.2x plus 10% = 0.22x Total ` x 1.15x We are given that the increased cost in future, in relation to existing selling price, will decrease the profit by 30%. Therefore, following equation can be formed:- 1.15 x + 0.7y = ` 3,000 1.15x+ 0.7 (3,000 -x) = 3,000 [from equation (1)] Solving, we get x = 2,000 and y = 1,000 Hence, present cost is ` 2,000 and present profit is ` 1,000. We are observing that profit is 1/3 of sales or 1/2 of cost. If this proportion of profit is also desired in the future, the future selling price is compute below:- Future cost (1.15x= 1.15 2,000) ` 2,300 Profit (1/3 of sales = 1/2 of cost) ` 1,150 Future sales ` 3,450 Answer to Q.5: (Nov, 2008) Product A Product B Direct materials ` 19,000 ` 15,000 Direct wages 15,000 25,000 Prime cost 34,000 40,000 Factory overheads (x % of direct wages) x 15,000 = 150 x 100 x 25,000 = 250x 100 Factory cost 34, 000+ 150x 40, 000+ 250x Administration overheads (y %of factory cost) y y ( 34,000+ 150x) ( 40,000+ 250x) 100 100 Total cost y y ( 34,000+ 150x) 1+ ( 40,000+ 250x) 1+ 100 100 Profit 60,000 25 =12,000 125 25 80,000 100 =20,000 Sales 60,000 80,000 Page No. 3
Following equation can be formed:- y 34,000+ 150 1+ = 60,000 12,000 = 48,000 100 ( x) y ( 40,000+ 250x) 1+ = 80,000 20,000 = 60,000 100 Dividing, we get 34,000 +150 x = 48,000 40,000+ 250x 60, 000 Solving, we getx= 40 andy = 20 Hence, factory overheads are 40% of direct wages and administration overheads are 20% of factory cost. Answer to Q.6: (May, 2008) Estimated cost sheet of next year Amount (`) Direct materials (12,00,000 160/100 94/100) (Note 1) 18,04,800 Direct wages (7,00,000 160/10 110/100) (Note 2) 12,32,000 Fixed overheads (3,60,000 plus 20%) 4,32,000 Fixed overheads (2,50,000 plus 60%) 4,00,000 Total estimated cost of production 38,68,600 Desired profit (1/10 of sales = 1/9 of cost) 4,29,867 Total budgeted sales 42,98,467 Note 1 (Materials): - (a) As compared to the last year, materials cost is to be increased by 60% due to more output. (b) Further, it is to be decreased by 6% due to price fall (decrease by 6% is effectively equal to 94%). Note 2 (Labour): - (a) As compared to the last year, labour cost is to be increased by 60% due to more output. (b) Also given that the labour efficiency will fall by 10%. It means that workers will have to make 10% extra efforts for achieving the desired output. Accordingly, labour cost is to be increased by 10%. Answer to Q.7: (Nov, 2008) First 3 Months Next 9 Months Output (units)(note 1) 78,000 3,51,000 Materials (` 15 per unit) 11,70,000 52,65,000 Labour (Note 2) 7,50,000 31,59,000 Prime cost 19,20,000 84,24,000 Overheads Fixed (Note 3) 2,40,000 7,20,000 Variable (` 8 per unit) 6,24,000 28,08,000 Semi-variable (Note 4) 1,77,500 6,45,000 Total cost 29,61,500 1,25,97,000 Profit (Note 5) 4,70,500 10,92,000 Sales 34,32,000 1,36,89,000 Hence, selling price per unit for next 9 months = `1,36,89,000 39 3,51,000 units = ` Page No. 4
Note:-1 (Output units) First 3 months Next 9 months 5,20,000 60/100 3/12 = 78,000 units 5,20,000 90/100 9/12 = 3,51,000 units Note:-2 (Labour cost) First 3 months 78,000 units @ ` 9 per unit OR ` 2,50,000 p.m. 3 months Next 9 months 3,51,000 units@ ` 9 per unit OR ` 2,50,000 p.m. 9 months whichever is more whichever is more Note:-3 (Fixed Overheads) First 3 months 9,60,000 3/12 = ` 2,40,000 Next 9 months 9,60,000 9/12 = ` 7,20,000 Note:-4 (Semi variable Overheads) Capacity utilization Annual semi variable overheads Upto 50% ` 5,60,000 More than 50% upto 75% 5,60,000 +1,50,000 = ` 7,10,000 More than 75% upto 100% 7,10,000 +1,50,000 = ` 8,60,000 First 3 months Capacity utilization = 60% Semi-variable overheads = 7,10,000 3/12 = ` 1,77,500 Next 9 months Capacity utilization = 90% Semi-variable overheads = 8,60,000 9/12 = ` 6,45,000 Note:-5 (Profit) First 3 months Sales = 78,000 units @ ` 44 = ` 34,32,000 Total cost = ` 29,61,500 (computed above) Profit = 34,32,000-29,61,500 = ` 4,70,500 Next 9 months Total desired profit (during the year) = ` 15,62,500 Profit realized in first 3 months = ` 4,70,500 Profit desired in next 9 months = 15,62,500-4,70,500 = ` 10,92,000 Page No. 5
Answer to Q.8: (Nov, 2005) Computation of Desired Sales value Amount (`) Materials cost 36,00,000 Rolling charges 6,20,000 42,20,000 Less: Scrap realization (60,000) Net cost 41,60,000 Add: Desired profit (12.5% on cost) 5,20,000 Desired sales value 46,80,000 Computation of selling price per ton Goods output Defective output Quantity 360 tons (90%) 40 tons (10%) Selling price `x/tonne ` 0.9x/tonne (due to 10% discount) Total sales value 360 `x= ` 360x 40 ` 0.9x= ` 36x Now, ` 396x = ` 46,80,000 Hence, x= ` 11,818. Therefore, selling price per ton Total ` 396x Good output = `x= ` 11,818 Defective output = ` 0.9x= ` 10,636 Answer to Q.9: (May, 2006) Basis Total Cars Insurance Finance Direct cost Documentation ` 100/policy 6,00,000 --- 6,00,000 --- cost on insurance Documentation cost on finance ` 200/loan 16,00,000 --- --- 16,00,000 Direct expenses on ` 5,000/car 5,00,00,000 5,00,00,000 --- --- cars sold Indirect cost Salesman salaries Rent Electricity Physical units Advertising 10,000: 6,000: 8,000 6,00,00,000 2,50,00,000 1,50,00,000 2,00,00,000 Total cost 11,22,00,000 7,50,00,000 1,56,00,000 2,16,00,000 Profit (balancing figure) 4,62,00,000 1,50,00,000 1,44,00,000 1,68,00,000 Revenue 15,84,00,000 9,00,00,000 3,00,00,000 3,84,00,000 Profit as % of revenue 29.17% 16.67% 48% 43.75% Computation of revenue Cars 3% of ` 30,000 lakhs = ` 9,00,00,000 Insurance 20% of ` 1,500 lakhs = ` 3,00,00,000 Finance 2% of ` 19,200 lakhs = ` 3,84,00,000 Page No. 6
Answer to Q.10: (Nov, 1998) 30% Capacity 100% Capacity Units produced and sold per month 30,000 units 1,00,000 units Works cost 30,000 380 = 11,40,000 1,00,000 310 = 3,10,00,000 Add: Administration expenses (fixed) 1,50,000 1,50,000 Cost of production 1,15,50,000 3,11,50,000 Add: Selling overheads Fixed marketing expenses 2,50,000 2,50,000 Variable selling expenses (` 30 p.u.) 9,00,000 30,00,000 Special marketing expenses Gift (` 30 per unit) --- 30,00,000 Lucky draw prize money --- 1,00,000 Refreshment --- 1,00,000 TV program sponsorship --- 20,00,000 Cost of sales 1,27,00,000 3,96,00,000 Profit (Balancing figure) 38,00,000 1,04,00,000 Sales 30,000 550 = 1,65,00,000 1,00,000 500 = 5,00,00,000 Advice: - It is recommended to operate the business activities at 100% level. Answer to Q.11: (Nov, 2004) Income Statement Amount (`) Amount (`) Sales revenue 34,00,000 Less: Cost of sales Cost of Production (See note) 24,00,000 Add: Opening stock of finished goods 2,50,000 Cost of goods available 26,50,000 Less: Closing stock of finished goods (3,75,000) Cost of goods sold 22,75,000 Add: Selling and distribution overheads Marketing promotion 1,50,000 Marketing salaries 2,50,000 Distribution costs 1,75,000 Customer service cost 2,50,000 (31,00,000) Net profit 3,00,000 Note (Schedule showing cost of production):- Amount (`) Amount (`) Direct materials cost Opening stock of raw materials 1,00,000 Add: Purchases of raw materials 11,50,000 Less: Closing stock of raw materials (1,25,000) Raw material consumed 11,25,000 (V) Direct labour cost 7,50,000 (V) Prime cost 18,75,000 Page No. 7
Factory overheads Sand paper 5,000 (V) Material handling cost 1,75,000 (V) Lubricants and coolants 12,500 (V) Miscellaneous indirect manufacturing labour 1,00,000 (V) Plant leasing cost 1,35,000 (F) Depreciation on factory equipment 90,000 (F) Property tax on plant equipment 10,000 (F) Fire insurance 7,500 (F) 5,35,000 Gross works cost 24,10,000 Add: Opening stock of work-in-progress 25,000 Less: Closing stock of work-in-progress (35,000) Works Cost/Cost of production 24,00,000 Answer to Q.12: (Nov, 2006) Total 3 months 6 months 3 months Output (units)(note 1) 1,21,875 28,125 60,000 33,750 Materials (` 10 per unit) 12,18,750 2,81,250 6,00,000 3,37,500 Labour (Note 2) 12,37,500 3,00,000 6,00,000 3,37,500 Prime cost 24,56,250 5,81,250 12,00,000 6,75,000 Overheads Variables (` 4 per unit) 4,87,500 1,12,500 2,40,000 1,35,000 Fixed 1,92,300 48,075 96,150 48,075 Semi-variable (Note 2) 65,000 15,000 32,000 18,000 Total cost 32,01,050 7,56,825 15,68,150 8,76,075 Desired profit (1/5 of sales = 1/4 of cost) 8,00,263 Desired sales 40,01,313 `40,01,313 Selling price per unit = 32.83 1,21,875units = ` Note:-1 (Output units) First 3 months 1,50,000 3/12 75% = 28,125 units Next 6 months 1,50,000 6/12 80% = 60,000 units Last 3 months 1,50,000 3/12 90% = 37,750 units Note:-2 (Labour cost) First 3 months 28,125 units @ ` 10 per unit OR whichever is more ` 1,00,000 p.m. 3 months Next 6 months 60,000 units@ ` 10 per unit OR whichever is more ` 1,00,000 p.m. 6 months Last 3 months 37,750 units ` 10 per unit OR whichever is more ` 1,00,000 p. m. 3 months Page No. 8
Note:-3 (Semi-variable cost) Capacity utilization Annual semi variable overheads Upto 75% ` 60,000 More than 75% upto 80% ` 64,000 More than 80% upto 85% ` 68,000 More than 85% upto 90% ` 72,000 More than 90% upto 95% ` 76,000 More than 95% upto 100% ` 80,000 First 3 months Next 6 months Last 3 months Capacity utilization = 80% Semi-variable overheads = 64,000 6/12 = ` 32,000 Capacity utilization = 75% Semi-variable overheads = 60,000 3/12 = ` 15,000 Capacity utilization = 90% Semi-variable overheads = 72,000 3/12 = ` 18,000 Answer to Q.13: (Nov, 2009) Trading and Profit and Loss Account for the year ended on March 31, 2009 Amount Amount (`) (`) To Direct materials 3,55,000 By Sales (1,80,000 units) 16,20,000 To Direct wages 3,60,000 By Closing stock of finished goods 1,50,000 To Manufacturing expenses 2,45,000 (3,000 units) To Office and administration expenses 2,40,000 By Interest received 25,000 To Selling and distribution overheads 2,00,000 To Donation and charity 20,000 To Interest on debentures 48,000 To Preliminary expenses written off 20,000 To Provision for tax 75,000 To Net profit 2,32,000 17,95,000 17,95,000 Amount (`) Direct materials 3,55,000 Direct wages 3,60,000 Prime cost 7,15,000 Add: Manufacturing overheads (80% of direct wages) 2,88,000 Factory cost 10,03,000 Add: Office and administration overheads (25% of factory cost) 2,50,750 Cost of production (2,10,000 units) 12,53,750 Less: Closing stock of finished goods ` 12,53,750 30,000 units 2,10, 000 units (1,79,107) Cost of goods sold (1,80,000 units) 10,74,643 Add: Selling overheads (` 1 per unit) 1,80,000 Cost of sales 12,54,643 Profit (Balancing figure) 3,65,357 Sales (1,80,000 units) 16,20,000 Page No. 9
Reconciliation Statement + Profit as per cost books 3,65,357 Manufacturing overheads over-recovered in cost books (2,88,000-43,000 2,45,000) Office and administration overheads over-recovered in cost books 10,750 Closing stock over-valued in cost books 29,107 Selling overheads under-recovered in cost books 20,000 Interest received recorded in financial books 25,000 Donation and charity, Interest on debentures, Preliminary expenses written off and Provision for tax recorded in financial books 1,63,000 4,44,107 2,12,107 Profit as per financial books = 4,44,107-2,12,107 = ` 2,32,000 Answer to Q.14: (May, 2002) Trading and Profit and Loss Account Amount (`) Amount (`) To Opening stock By Sales (14,500 units) 20,80,000 Finished goods (875 units) 74,373 By Closing stock Work-in-progress 32,000 Finished goods (375 units) 41,250 To Raw material consumed 7,80,000 Work-in-progress 38,667 To Direct labour 4,50,000 By Interest received 45,000 To Factory overheads 3,00,000 By Rent received 18,000 To Goodwill written off 1,00,000 To Administration overhead 2,95,000 To Dividend paid 85,000 To Bad debts 12,000 To Selling overheads 61,000 To Net profit 33,544 22,22,917 22,22,917 Amount (`) Direct materials 7,80,000 Direct wages 4,50,000 Prime cost 12,30,000 Factory overheads (60% of direct wages) 2,70,000 Gross works cost 15,00,000 Add: Opening stock of work-in-progress 32,000 Less: Closing stock of work-in-progress (38,667) Works cost 14,93,333 Administration overhead (20% of works cost) 2,98,667 Cost of production (14,000 units ` 128 per unit) 17,92,000 Add: Opening stock of finished goods (875 units ` 104 per unit) 91,000 Cost of goods available (14,875 units @ weighted average cost of ` 126.588 per unit ) 18,83,000 Less: Closing stock (375 units ` 126.588 per unit ) (47,471) Cost of goods sold (14,500 units) 18,35,529 Add: Selling overheads (14,500 units ` 4 per unit ) 58,000 Cost of sales 18,93,529 Profit (Balancing figure) 1,86,471 Sales 20,80,000 Page No. 10
Reconciliation Statement + Profit as per cost books 1,86,471 --- Factory overheads under-recovered in cost books --- 30,000 Administration overheads over-recovered in cost books 3,667 --- Opening stock finished goods over-valued in cost books 16,627 Closing stock of finished goods over-valued in cost books --- 6,221 Selling overheads under-recovered in cost books --- 3,000 Interest and rent received not recorded in cost books 63,000 --- Goodwill written off, Dividend, Bad debts not recorded in cost books --- 1,97,000 2,69,765 2,36,221 Profit as per financial books = 2,69,765-2,36,221 = ` 33,544 Answer to Q.15: (June, 2009) Memorandum Reconciliation Account Amount (`) Amount (`) To Net loss as per costing books 2,13,000 By Administration overheads 3,000 To Factory overheads under-absorbed in 5,000 over-absorbed in cost accounts cost accounts By Depreciation over-charged in 10,000 To Income tax not provided in cost accounts 65,000 cost accounts To over-valuation of closing stock 7,000 By Interest on investment not 20,000 To Preliminary expenses written off 3,000 included in cost accounts By Transfer fees in financial books 2,000 By Net loss as per financial books 2,58,000 2,93,000 2,93,000 Answer to Q.16: (Nov, 2005) Amount (`) Direct materials 23,01,000 Direct wages 12,05,750 Prime cost 35,06,750 Production overheads (20% of prime cost) 7,01,350 Gross works cost 42,08,100 Less: Closing stock of work-in-progress (97,500) Works cost 41,10,600 Add: Administration overheads (31,000 units ` 9.75) 3,02,250 Cost of production( 31,000 units) 44,12,850 Less: Closing stock of finished goods ` 44,12,850 1,000 units 31, 000 units (1,42,350) Cost of goods sold (30,000 units) 42,70,500 Add: Selling overheads (30,000 ` 13) 3,90,000 Cost of sales 46,60,500 Profit (Balancing figure) 2,14,500 Sales 48,75,000 Page No. 11
Reconciliation Statement + Profit as per cost books 2,14,500 --- Production overheads over-recovered in cost books 9,100 --- Administration overheads under-recovered in cost books --- 8,125 Selling overheads over-recovered in cost books 21,125 --- Closing stock of finished goods over-valued in cost books --- 12,350 Dividend received and Bank interest not recorded in cost books 4,55,000 --- Preliminary expenses, Goodwill, Fine, Interest, Loss & Tax not recorded in cost --- 2,95,750 books 6,99,725 3,16,225 Profit as per financial books = 6,99,725-3,16,225 = ` 3,83,500 Answer to Q.17: (May, 2007) Amount (`) Direct materials 10,40,000 Direct wages 6,00,000 Prime cost 16,40,000 Factory overheads (60% of direct wages) 3,60,000 Factory cost 20,00,000 Administration overhead (20% of factory cost) 4,00,000 Cost of production (10,000 units) 24,00,000 Add: Opening stock of finished goods (500 units ` 180 per unit) 90,000 Cost of goods available (10,500 units) 24,90,000 Less: Closing stock of finished goods ` 24,00,000 250 units (FIFO Method) 10, 000 units (60,000) Cost of goods sold (10,250 units) 24,30,000 Add: Selling overheads (10,250 units ` 24 per unit ) 2,46,000 Cost of sales 26,76,000 Profit (Balancing figure) 1,94,000 Sales 28,70,000 Produced quantity = Sold quantity + closing stock opening stock = 10,250 + 250 500 = 10,000 units Reconciliation Statement + Profit as per cost books 1,94,000 --- Factory overheads under-recovered in cost books --- 19,000 Administration overheads under-recovered in cost books --- 24,000 Opening stock over-valued in cost books 20,000 --- Closing stock over-valued in cost books --- 10,000 Selling overheads over-recovered in cost books 26,000 --- Interest and Rent received not recorded in cost books 41,000 --- Bad debts and Preliminary expenses not recorded in cost books --- 36,000 2,81,000 89,000 Profit as per financial books = 2,81,000-89,000 = ` 1,92,000 Page No. 12
Answer to Q.18: (May, 2003) Memorandum Reconciliation Account Amount (`) Amount (`) To Net loss as per costing books 3,47,000 By Administration overheads over 60,000 absorbed To Factory overheads underabsorbed in cost books 40,000 By Interest on investments not included 96,000 To Depreciation less charged in By Transfer fees (credited in financial 24,000 50,000 cost books books) To Income tax provided in financial By Store adjustment (credit in financial 54,000 books books) 14,000 To Interest on loans provided in By Dividend received (credit in financial 2,45,000 financial books books) 32,000 By Net loss as per financial books 5,10,000 7,36,000 7,36,000 Answer to Q.19: (Nov, 2012) Reconciliation Statement + Net profit (loss) as per cost books 35,400 Administration overheads under-recovered in cost books 25,500 Depreciation less charged in cost books 26,000 Factory overheads over-recovered in cost books 1,35,000 Dividend received not recorded in cost books 20,000 Loss due to obsolesce charged in financial books 16,800 Income-tax provided in financial books 43,600 Bank-interest credited (income) in financial books 13,600 Opening stock over-valued in cost books 20,000 Closing stock under-valued in cost books 6,500 Goodwill written off in financial books 25,000 Notional rent on own premises provided in cost books only 60,000 Provision for doubtful debts provided in financial books 15,000 2,55,100 1,87,300 Profit as per financial books = 2,55,100 1,87,300 = ` 67,800 Answer to Q.20: (May, 2014) Memorandum Reconciliation Account Dr. Cr. Amount (`) Amount (`) To Net loss as per cost accounts 48,700 By Administration overheads overrecovered in cost accounts 65,000 To Factory overheads underabsorbed in cost accounts By Depreciation overcharged in 45,000 30,500 To Provision for income-tax 52,400 cost accounts (` 2,70,000 ` 2,25,000) To Obsolescence loss 20,700 By Transfer fees in financial books 10,200 To Overvaluation of closing stock in By Normal rent of own premises 54,000 9,500 cost accounts (` 1,22,000 ` By Overvaluation of opening stock 23,000 1,12,500) in cost accounts(` 1,38,000 ` To Net profit (as per financial accounts) 35,400 1,15,000) 1,97,200 1,97,200 Page No. 13