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ILLUSTRATION 9 (When profits as per financial & cost accounts are given). From the following summary of Trading and Profit and Loss Account which appears in the financial accounts of X. Ltd., and the additional information given, you are required to prepare detailed statement reconciling the profit of $60,570 as disclosed by the Financial Accounts with the figure of profit i.e. $54,650 as disclosed in Cost Accounts. 11 10 11 SUMMARY OF TRADING AND PROFIT AND LOSS ACCOUNT $ $ To Opening Stock 5,000 By Sales 3,15,000 Purchases 1,35,000 " Closing Stock 8500 Direct Wages 42,500 " Works Expenses 10,500 To Depreciation 12,200 Gross Profit c./d 1,18,300 3,23,500 323,500 To Selling Expenses 34,220 By Gross Profit b/d 1,18,300 Administer Expenses 21,790 Profit on Sale of Land Financial Expenses 5,470 Investment Income Net Profit 60,570 1,22,050 1,22,050 Note. (a) In the Cost Accounts (i) works expenses are charged at a rate of 5 cents per product produced, selling expenses are charged at a rate of 12 per cent on sales,sal administration expenses are charged at a fixed sum of $25,000 per annum, which include financial expenses $13,000 (b) Items of non-revenue value are not included in the Cost Accounts. (c) In the Cost Accounts, stock is valued at direct cost (Materials and Labour) but in financial accounts, it includes an allowance for overheads. 11 1 Valued : Materials Labour Overheads Opening Stock Closing Stock (5,000 units) (8,000 units) $ $ 3,100 5,300 1,100 1,700 800 1,500 5,000 8,500 Sales were 2,10,000 units at $1.50 per unit