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Inter Process Profits
Inter Process Profits
Closing stock of finished goods was valued at Rs.45,000 and the balance was
sold for Rs. 1,50,000.
Prepare Process Accounts and Finished Stock Account.
Solution:
Process A A/c
Working Notes:
Illustration 2:
From the following information prepare Process Accounts and calculate the actual
profits earned by a company for the month of January 2003:
Stocks in process are valued at prime cost and finished stock has been valued
at price at which it received from Process C. Sales during the period were Rs.
1,40,000.
Solution:
Process A Account
Opening Reserve will be treated as realized profit and therefore added to
process profits. Closing reserve will be treated as unrealized profit and
therefore deducted from the process profits.
Illustration 3:
There are two processes in a factory manufacturing a single product.
Following are the particulars of expenses incurred in different processes:
After crediting the Process I with Rs. 5,000 being the estimated realizable
value of waste and by-product and Rs.8,000 against process profits the balance
is transferred to process II. There is no wastage of by-product in Process II and
the output is transferred to Finished Stock Account with a margin of 25% on
total cost. The Finished Stock inventories at the end of period showed a
balance of Rs. 21,000.
Prepare Process Accounts and show what figure should be adopted for Balance
Sheet purpose?
Solution: