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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

In a non-integrated system, raw materials worth ₹2,40,000 are purchased on credit and ₹1,80,000 of them are issued to production. Which entry set correctly records these in the cost ledger?

The correct entries debit Stores Ledger Control and credit Cost Ledger Control for ₹2,40,000 purchases, then debit WIP Control and credit Stores Ledger Control for ₹1,80,000 issued. Creditors do not appear in a self-balancing cost ledger.

  1. AStores Ledger Control A/c Dr 2,40,000 to Cost Ledger Control A/c 2,40,000; WIP Control A/c Dr 1,80,000 to Stores Ledger Control A/c 1,80,000Correct
  2. BStores Ledger Control A/c Dr 2,40,000 to Creditors 2,40,000; WIP Control A/c Dr 1,80,000 to Stores Ledger Control A/c 1,80,000
  3. CCost Ledger Control A/c Dr 2,40,000 to Stores Ledger Control A/c 2,40,000; Stores Ledger Control A/c Dr 1,80,000 to WIP Control A/c 1,80,000
  4. DStores Ledger Control A/c Dr 1,80,000 to Cost Ledger Control A/c 1,80,000; WIP Control A/c Dr 2,40,000 to Stores Ledger Control A/c 2,40,000

Explanation

Creditors are a financial-book account, so the cost ledger credits Cost Ledger Control A/c for purchases. Issue to production debits WIP and credits Stores. Option 2 wrongly uses Creditors in the cost ledger; the others reverse or mismatch the amounts.

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