RECONCILIATION STATEMENT- A PROBLEM AND ANSWER
From the following
figures, prepare a Reconciliation statement and determine financial profit.
|
|
|
|
Net Profit as per costing books Factory overhead under-recovered
in costing Administration overhead recovered
in excess Depreciation charged in financial
books Depreciation recovered in costing Interest received but not
included in costing Income tax provided in financial books
Bank interest credited in
financial books Stores adjustment credited in
financial accounts Depreciation of stock charged in
financial accounts Dividend appropriated in
financial accounts Loss due to theft and pilferage
provided only in financial books |
66,760 5,700 4,250 3,660 3,950 450 600 230 420 860 1,200 260 |
STEP 1: Find out reasons for disagreement and decide - ADD/ LESS item
|
|
What caused |
Action |
|
Factory overhead
under-recovered in costing (shown less) |
Increased the cost profit |
Less |
|
Administration overhead
recovered in excess |
Decrease in cost profit |
Add |
|
Interest received not shown in
cost acc |
Decreased the profit |
Add |
|
Income tax provided in financial
books –expenses |
Increased the cost profit |
Less |
|
Bank interest credited in
financial books- INCOME |
Decrease in cost profit |
Add |
|
Stores adjustment credited in
financial accounts- INCOME |
Decrease in cost profit |
Add |
|
Depreciation of stock charged in
financial accounts-Expenses |
Increased the profit |
Less |
|
Dividend appropriated in
financial accounts-EXPENSE |
Increase in cost profit |
Less |
|
Loss due to theft and pilferage
provided only in financial books-EXPENSES |
Increased the cost profit |
Less |
RECONCILIATION STATEMENT
|
|
|
|
|
NET PROFIT AS PER COST ACCOUNTS
|
|
66,760 |
|
ADD: Administration overheads-
overcharged Depreciation as per
cost accounts Interest received not shown in
cost acc Bank interest credited in
financial books- INCOME Stores adjustment credited in
financial accounts- INCOME |
4,250 3,950 450 230 420 |
9,300 |
|
|
|
76,060 |
|
LESS: Factory overhead
under-recovered in costing (shown less) Income tax provided in financial
books –expenses Depreciation of stock charged in
financial accounts-Expenses Dividend appropriated in
financial accounts-EXPENSE Loss due to theft and pilferage
provided only in financial books-EXPENSES |
5,700 3,660 600 860 1,200 260 |
12,280 |
|
|
|
63,780 |
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