XYZ Ltd. declared a net profit of 2,25,000 based on their financial accounts for the year ending 31st March, 2024. The profit disclosed in cost…

CA Intermediate · Cost and Management Accounting · PYQS · September 2024
XYZ Ltd. declared a net profit of 2,25,000 based on their financial accounts for the year ending 31st March, 2024. The profit disclosed in cost books are not matched with financial accounts. The following information were revealed during the scrutiny of the figures of both the sets of books: Sr. No. Particulars ₹ 1. Preliminary expenses written off in financial accounts 35,000 2. Factory Overheads Over charged in cost accounts 20,000 3. Expenses on issue of shares in financial accounts 30,000 4. Undervaluation of closing stock in cost accounts 65,000 5. Interest on Bank Deposits in financial accounts 60,000 6. Under recovery of administration overheads in cost accounts 25,000 7. Notional Rent of own premises charged in cost accounts 30,000 8. Under recovery of selling overheads in cost accounts 35,000 9. Bad debts recovered in financial accounts 50,000 Required: Prepare Reconciliation Statement to arrive at net profit/loss as per Cost Accounts.

Suggested Answer and Working Notes:

Reconciliation Statement (₹) (₹) Profit (loss) as per Financial Accounts 2,25,000 Add: Preliminary expenses written off 35,000 Expenses on issue of shares in financial accounts 30,000 Under recovery of administration overheads in cost accounts 25,000 Under recovery of selling overheads in cost accounts 35,000 1,25,000 Less: Factory Overheads Over charged in cost accounts 20,000 Undervaluation of closing stock in cost accounts 65,000 Interest on Bank Deposits 60,000 Notional Rent of own premises charged in cost accounts 30,000 Bad debts recovered in financial accounts 50,000 (2,25,000) Net Profit as per Cost Accounts 1,25,000

Topics: Cost Accounting Systems

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