What Is The Principal Accounting Fees And Services

The following points highlight the tiptop xi master accounts to be maintained in cost ledger. The master accounts are: 1. Full general Ledger Adjustment Account ii. Stores Ledger Control Account three. Wages Control Account four. Work-in-Progress Ledger Command Account 5. Finished Goods Ledger Control Account half-dozen. Factory Overhead Control Account 7. Administration Overhead Control Account 8. Cost of Sales Account and Others.

1. General Ledger Adjustment Account:

This is likewise called Price Ledger Control Account or Financial Ledger Control Account. This account maintains a link with financial account, completes the double entry and makes the cost ledger self-balancing. So the Price Ledger Control business relationship is debited or credited in places of Greenbacks A/c, Banking concern A/c, Debtors A/c, Creditors A/c or any other business relationship not actualization in cost accounting.

2. Stores Ledger Command Account:

This account is debited with all purchases of materials for the stores and credited with the problems of materials from the stores. The balance of this account represents the stock value of materials lying in the store.

3. Wages Command Account:

This account is debited with gross wages (paid and accrued) and is closed past transfer of directly wages to piece of work-in-progress control account and indirect wages to factory, administration and selling and distribution overhead control accounts.

4. Work-in-Progress Ledger Control Account:

All directly materials, direct wages, straight expenses, special purchases and manufacturing plant overheads recovered are debited to this account. The value of finished goods completed in a catamenia and transferred to Finished Goods Control Account is credited to this business relationship. The balance of this account represents the value of unfinished jobs.

v. Finished Appurtenances Ledger Control Account:

This account is debited with the cost of finished goods transferred from work-in-progress control account and the amount of administration overheads captivated. This account is credited with price of sales by transferring to toll of sales account. The balance of this account represents the value of unsold stock at the end of the flow.

6. Factory Overhead Control Account:

This account is debited with indirect material cost, indirect wages and indirect expenses and is credited with the amount of overheads absorbed which is transferred to Work-in-Progress Control Account. The balance in this account represents under- or over-absorbed overheads and is transferred to Overhead Aligning Account or Costing Turn a profit and Loss Account.

7. Administration Overhead Command Account:

This account is debited with assistants overhead cost incurred and is credited with the amount of overheads absorbed by finished goods. The balance in this account represents under or over-captivated overheads which is transferred to Overhead Adjustment Account or Costing Profit and Loss Account.

viii. Cost of Sales Account:

This account is debited with the cost of goods sold by transfer from finished appurtenances ledger control account and selling and distribution overheads captivated. It is airtight by transfer to Costing Profit and Loss Account.

9. Selling and Distribution Overhead Control Account:

This account is debited with selling and distribution overhead incurred and is credited with overhead absorbed by Cost of Sales. The balance in this account represents under or over-absorbed overheads which is transferred to Overhead Adjustment Account or Costing Profit and Loss Account.

x. Overhead Adjustment Account:

This account is debited with under-absorbed overheads for mill, administration and selling and distribution overheads and is credited with over-absorbed overheads. The balance in this account represents the internet amount of over- or nether-absorption which is transferred to Costing Profit and Loss Business relationship.

eleven. Costing Profit and Loss Business relationship:

This account is debited with the Cost of Sales, aberrant losses and under-absorbed overheads and is credited with sales value, abnormal gains, over-absorbed overheads. The balance in this account represents costing profit or loss which is transferred to Full general Ledger Adjustment Account.

Long Practical Problems and Solutions:

1. From the following details show necessary accounts in the cost ledger:

Accounts in the Cost Ledger

ii. In the cost ledger of a firm the following balances appear:

Cost Ledger

Balances

Solution

3. The following balances are extracted from the books of Reliance Manufacturing Company:

The toll journal shows that Rs 18,226 and Rs. 2,630 were allocated to piece of work-in-progress in respect of works overhead and part overhead respectively. You are required to show the necessary ledger accounts under not-integrated system and extract a Trial Balance equally on 31^st December, 2010.

Solution

iv. On 31^st March 2011 the following balances were extraction from the books of the Supreme Manufacturing Company:

Factory overheads are applied to production at 150% of directly wages, any under or over-absorbed overhead being carried forward for adjustment in the subsequent months. All administrative and selling expenses are treated every bit period cost and charged off to the profit and Loss Business relationship of the calendar month in which they are incurred.

Set all the relevant ledger accounts in cost ledger and extract a Trial Residuum every bit on thirty^thursday April 2011.

Solution

Working Notes

5. A company operates separate toll accounting and financial accounting systems. The following is the listing of opening balances every bit on one.04.2011 in the price ledger:

The company's Gross turn a profit is 25% on Mill Price. At the stop of the quarter, WIP stocks increased by Rs. vii,500. Fix the relevant control Accounts, Costing Turn a profit and Loss Account and Full general Ledger Adjustment Account to record the above transactions for the quarter ended 30.06.2010.

Hints to Answer:

(i) Gross profit is 25% on manufacturing plant cost or 20% on sales.

Hence cost of sales = Rs 2,56,000 – 20% of Rs. two,56,000 = Rs. ii,04,800

(ii) Cost of finished goods produced = Rs. 2,02,900

(three) Production overhead absorbed = Rs. i,15,900

(iv) Costing Profit Rs. 48,000

(v) Closing Balances: Stores Ledger A/C Rs. 39,175, WIP Command A/C Rs. ane,12,095

Finished Goods Control A/C Rs. 28, 880, Full general Ledger Adjustment A/C. Rs. 1,lxxx,150