Product A passes through three processes before it is completed and transferred to the finished stock. There were no stocks in hand and no WIP too on 1June. The following data were available in respect of Processes 1,2 and 3 for the month of June
|
Details |
Process 1 |
Process 2 |
Process 3 |
|
Direct materials Direct wages Stock of materials |
20,000 15,000 5,000 |
5,000 10,000 6,500 |
4,000 20,000 9,500 |
Stocks of finished goods amounted to Rs. 1,11,000 and the stock was valued at Rs. 5000. The output of each process is transferred to the next process at an amount which will yield 20% of profit on the transfer price. The transfer from Process 3 to the finished stock is to be similarly treated.
Prepare (a) Necessary process accounts and finished stock account showing the profit element at each stage and (b) Ascertain the value of closing stock for the purpose of balance sheet.