Losses in process and weighted averages method ABC ple operates an integrated cost accounting system and has a financial year which ends on 30 September. It operates in a processing industry in which a single product is produced by passing inputs through two sequential processes. A normal loss of 10% of input is expected in each process.

The following account balances have been extracted from its ledger at 31 August:

ABC ple uses the weighted average method of accounting for work in process.
During September the following transactions occurred:

Overhead costs are absorbed into process costs on the basis of 150% of labour cost.
The losses which arise in process 1 have no scrap value: those arising in process 2 can be sold for £2 per kg.
Details of opening and closing work in process for the month of September are as follows:

In both processes closing work in process is fully complete as to material cost and 40% complete as to conversion cost.
Stocks of finished goods at 30 September were valued at cost of £60000.
Required:
Prepare the ledger accounts for September and the annual proft and loss account of ABC plc. (Commence with the balances given above, balance off and transfer any balances as appropriate.)

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Debit Credit () () Process 1 (Materials 4400; 8144 Conversion costs 3744) Process 2 (Process 1 4431; 9681 Conversion costs 5250) Abnormal loss 1400 Abnormal gain 300 Overhead control account Sales Cost of sales 250 585 000 442 500 Finished goods stock 65 000