Question

In: Accounting

Cost Accounting Question. The profit shown in the financial accounts is Shs. 18,592 and for the...

Cost Accounting Question.

The profit shown in the financial accounts is Shs. 18,592 and for the same period, the cost accounts showed a profit of 20,496. Comparison of the two sets of accounts revealed the following:

Stock Valuations:

Cost Accounts

Financial Accounts

Raw Materials

Shs

Shs

Opening Stock

6,841

7,269

Closing Stock

5,493

5,148

Finished Goods

Opening stock

13,281

12,915

Closing stock

11,410

11,141

Dividends and interest received of Shs.572 and a loss of 1,950 on the sale of a milling machine were not entered in the cost accounts

Required: Prepare a reconciliation of the two profits

Solutions

Expert Solution

RECONCILIATION STATEMENT
Profit as per Financial Account        18,592
Add :-
Difference in Closing Stock of Finished Goods              269
Difference in Closing Stock of Raw Materials              345
Difference in Opening Stock of Raw Materials              428
Loss on sales of Machinery           1,950
Less:-
Difference in Opening Stock of Finished Goods             -366
Interest received             -572
Profit as per Cost Account        20,646
But profit given as per cost account        20,496
Remarks :- Some information of 150 is missing.

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