362 SAHITYA BHAWAN PUBLICATIONS

Account
How to deal with Plant in Contract
Alc with the following informatin.
2. Show how you would deal with Plant in 'A' Contract 40,000. Plant costing ? 2,000 was
Plant issued to contract on 1st June, 2014 costing
"BContract on 30th Nov., 2014. Plant costing 1,000 was stolen
by fire. Plant costing 2,000 was sold for 2,200. Plant at the
and another
costing 500
end ofthe year was transfederst.erodye
valued
bby
t
depreciation @ 10% per annum on 31st March, 2015.
Ans. Cost of Plant at site 34,500, Depreciation 72,875, Balance of Plant at Site 31,625.
Caleulation of Tender Price of Contraet
chargjng
3. From the following particulars, write up the Contract No. 5 Account and find out the value of the
tender
Materials used
Productive wages
Direct Expenses
3,000
2310
Provide 60% on Productive wages for Works overhead and 12.5% on Works cost for 230
Office overhead
Profit to be realised 15% on the tender price.
Ans. Profit? 1376, Tender Price 9,172.
Contract Commenced during the year and Completed within
the same Financial Year
4. Xundertook a contract for constructing a building from Yon 1st April, 2014. The contract price wWa8
R 10,00,000. He incurred the following expenses
Material Consumed
Wages 60,000
Direct Expenses 50,000
2,00,000
Plant Purchased
The contract was completed on 3lst September, 2014 and the contract price was duly revived. Provide
1,00,000
depreciation @10% on plant and charge indirect expenses 20% on wages. Materials in handon 31st
March were 10,000. Prepare Contract Account.
Ans. Profit 6,80,000.
5. Write up Contract No. 200 from the following particulars:
Direct Materials 39,600; Wages 26,400; Special Plant 17,600; Stores issued 7,040: Loose Tools
{ 3,300; Cost of Tractor :
Running Materials 2,200
Wages of drivers, etc. 3,520
Other direct charges 2,640
The Contract was completed in 13 weeks, at the end of which period plant was returned subject to
depreciation of 15% on the original cost. The values of loose tools and stores returned were 2.200
and 890 respectively. The value of the tractor was 20,000and depreciation was to be charged to
this contract at the rate of 15% per annum.
You are required to provide for administrative expenses at the rate of 10% on total works cost. The
contract pricewas 1,00,000
Ans. Works Cost 85,000, Adm. Expenses 8,500, Profit 6,500.
6. Kamal Contractor undertook a contract for 50,000 which was completed in six
expense8 were made by the contractor to complete the contract : mnonths. Following
Direct Materials 19,000; Wages 11,000; Special plant (Plant purchased on 1.7.2013)
Stores issued 3,500; Loose tools 1,500; Running Cost of Tractor &Running Materials? 10,000;
of Driver 2,200; Other direct expenses 1,000. 800; Wages
On completion of the contract, plant was returned subject toa
loose tools and stores returned 1,200 and 800 respectively. depreciation
The value of
of 10% p.a. The value of
and depreciation was to be charged for this contract @16% per annum. The the tractor was 40,000
anount
expenses tobe charged to contract is calculated @10% of total works cost. Prepare of administration
for the period ending 3lst March, 2015 in the books of Contract Account
contractor.
Ans. Works cost 41,200; Adm. Exp. R4,120; Tbtal profit 4,680.
7. Prepare Contract Account from the following
Materials 40,000; Wages 27,000: Plant 18,000: particulars :
Stores issued 2,000; Loose tools 3,500; Other
indirect expenses 2,700; Running Materials of tractor and wages of drivers 6,000.
The contract was completed in 73 days. At the end of this period plant was returned after charging
 CONTRACT COSTING 363

154depreciation on original cost. The values of loose tools and stores returned were 7 2,400 and
respectively The value of the tractor was 18,000 and depreciation was to be charged to this
900 at the rate of 15% per annum. You are required to provide for Administration expenses at
ontract
therate of 10% on total works cost. The contract price was 1,15,000.
Ans.
Works Cost ? 81,140, Total Profit 25.746.
2013 the firm of Banerjee & Sons, took the work under a contract for erecting atwo storied
In Oct., forthe Calcutta Pottery Works, the value of 2013-14.
þuilding which was estimated at two lakh in
Ranerjee & Sons spent the following in respect of this work :
Materials 35.000; Wages 20,000 and Incidental expenses 5,000.
received| the following instalments from the Calcutta Pottery Works:
They 2013, 50,000; 28th Feb., 2014, 25,000.
31st Dec.,
Duringthe year 2014-15, their expenses on this contract were as follows :
Materials 50,000; Wages 40,000; and Incidental expensess 10,000.
SMalso received four instalments as follows : 25,000.
25,000 and 31st Decernber,
31st April, 25,000; 30th June, 7 25,000; 30th September,
2015, the work was completed. Show the Contract Account and Contractee's Account
Bv31st. March,
ledger.
firm's
intheValue of Work-in-Progress in First Year 60,000
Profit transferred to Profit and Loss A/c in 2nd year 40,000.
Debit Balance of Contractee Alc (1I Year)
Credit Balance of Contractee Alc (IYear) 75.000:
25,000.
completed on 31st
contractor undertook a contract of 5,00.000 on 1st April, 2014. The work was
. A thiscontract:
Sentember, 2015. Following are the details ofMaterials Durchased directly from vendor 45,500;
Materials sent to site from stores 30,200: Direct charges
20.300: Labour engaged ?1,35,000;
Materials received from other contracts General expenses 32.000: Establishment charges
42.000; Plant installed at site 40.000: charges accrued 3.000: General charges accrued 5,000;
18.000; Wages accrued 7 12,000; DirectMaterials at site 13.000: Materials transferred to other
Materials returned to stores 15,000: (costing 15,000)Z10,000;
(costing 8,000) 9,000: Plant sold
contracts 11,000; Materials sold
Materials destroyed by fire 8,000.depreciation on plant@ 10% per annum from the above particulars.
Prepare a contract account charging2,10,750.
Ans. Profit to Profit & Loss Alc, been sold in the beginning.
Hints :It is assumed that plant has is less
Incomplete Contract : When work Certified
Contract Price
than 1/4th of the
certified, if:
contract is 20 lakh and cash payment is 80% of work Expenditure to date on
10. The price of a Work uncertified
Workcertified contract

10,000 4,00,000
A 4,00,000 20,000 7,00,000
P 6,00,000 40,000 10,00,000
What should
C 12,00,000
amount will be transferred to Profit & Loss A/c? and (iü)
Under each situation (i) What necessary.
Work-in-Progress Alc? Clarify through the accounts with notes where Balance of WIP
be shown in contract price,
work certified is less than l/4th of WIPAc 6,20,000; (C) Profit to
Ans. (A) No Profit to P & L Alc as
to P & LAlc 80,000, Balance of
Alc 4.00,000; (B) Loss WIP Alc 11,28,000.
P&LAe 1,28,000; Balance of on lst April, 2014.
contract for the construction ofa certain building
following expenditure
l. Abuilding contractor took a The contractor had made the
agreed at 4,00,000.
The contract price was 20,000
during the year : 5,000
Direct materials purchased 15,000
Materials issued from Stores 40,000
Direct Labour 10,000
Plant 90,000
Indirect expenseS Total
364 SAHITYA BHAWAN PUBLICATIONS

From the following further particulars, prepare a Contract Account for the year
mount of Work-in-Progress which will be shown in Balance Sheet of the
contractor Also show the
Value of plant on 31st March, 2015
Stock of materiais at site on 31st March, 2015
Materials returned to stores 30090
5009
Work certified by architect 1009
Cash received from contractee
Cost of work not yet certified 75,0
contract certified is 4,00009
70, 000
Ans. Proft 25,000; No profit will be tranaferred to P & L Alc as the less
V4th of contract price. Work-in-progress in Balance Sheet ? 54,000. than
12. On lst Apnl, 2014 Contractors Ltd. commenced to build a cinema hall, the contract price being
6,00,000. During the year ended 31st March, 2015, they incurred the tollowing expenses:
Materials purchased directly 50,000;, Materials is8 uedfrom stores 710,000; Direct wages 742 0m
Plant 10,000; Overhead charges 3.000. 75% had
Work to the value of? 1,20,000 had been certified on 31st March, 2015 of which been received
in cash. Cost of work completed but not certified was 10,500. Materials valued at 5.000 were on
hand at site.
Afer allowing depreciation @20% p.a. on plant, prepare an account showing the profit earned to
date and the amount of profit for which company may take credit in its accounts on 31st March,
2015.Also prepare Work-in-Progress Alc.
Ans. Bal. 28,500 transferred to W.I.P.
When Certified Work is more than 1/4th of Contract
Price but less than 1/2 of Contract Price
13. Following expenses were incurred by a contractor on a contract which he started on lst April. 2014.
Materials 40,000; Wages 50,000; Other expenses 15,000; Plant at cost50,000; Work certifed
1,20,000; Work uncertified 60,000; Materials on hand on 31st March, 2015 11,000; Plant at close
{ 43,000; Cash received from contractee 1,00,000; Materials returned to stores 2,000.
Prepare Contract Account and Work-in-Progress Account, assuming that the contract price was
? 3,50,000. How will work-in-progress appear in the Balance Sheet of the contractor?
Ans. Since more than /4th but less than /2 of the contract has been carried out, profit can be
ascertained as follows :
Total Profit 81,000; Profit transferred to Profit and Loss Account 22,500; Balance of
Work-in-Progress for Balance Sheet 1,21,500.
14. The following particulars relate to a contract undertaken by a firm of engineers (Year l.4.2014 to
31.3.2015) :
Materials sent to site 85,349; Labour engaged 74,375; Plant installed 15,000; Direct expenses
3,169; Establishment charges 4, 126; Materials returned to stores 549; Work certifiedz 195,00;
Work not certified 4,500; Material in hand on 31.3.2015 1,883: Wages due on 31.3.2015 2,400;
Direct expenses accrued 31.3.2015 240; Value of plant 31.3.2015 11,000.
The contract price was 5,00,000. Cash received from contractee was 1,80,000. You are
to (a) Prepare Contract Account, (b) Prepare the Contractee's Account. requred
Ans. Total Profit 28,273, Profit to P & LA/c 8,699, Profit to WIP
15. On lst April, 2014, a contract for 3,00,000 was
19,574.
undertaken and following expenses were incurred
during the year :
Materials issued from stores 2,000; Materials purchased 60,000: Wages 40,000; Wages accrueu
31.3.2015 10,000; Indirect expenses 18,000; Plant sent at site 80,000: Materials returneu
stores 4,000; Materials lost by fire 1,000; Materials at site 3.000: Depreciation 0n pla
J2.5% p.a. Work uncertified 20,000; Cash received from
Cash received is &80% of work certified i.e., after contractee 1,12,000.
deduction of 20%% retention money.
From the above particulars, present : (a) Contract Ac, (b)
part of the Balance Sheet. Works-in-Progress A/c, and (c) Keae
Ans. 'Total Profit? 28,000; Profit to P. & L. Afe 7,467;
Balance of WIP 1,39,467.
 CONTRACT COSTING
When work certified is more than 12 f Contrat Price
Ram ommenced his contract on 1st
Si Apr), 2014. Preare Contract Ae from the ilawn
6 information
Materials issued 60,000: Wages 5% of materials issud. Indiret
21.000: Material worth ? 2.000 were Jost in fire and worth ?1M) were tien awy ythen
Plant at site on 31st March, 2015 was 18.000, Casth reEIVed ?
certifed Work uncertified 4,500. Total contract value is 2,0
Ans. Total Profit 57,000; Profit to P. &L Wc 30,400
comtract ledger of a company showed the following exyeroditure un acrtt
2015 :
on31stMarch,
Materials 12/09
Plant
Wages 5,70
Establishment Charges
was 400.Caa r
Thecontract was commenced in Apri, 2014 and the ontract urice crtifei ther a i g 2 p
munt to date was 1,72,000representing &0 Der cent fthe work
n hand w2s 7 45O 2 AwI
ent being retained untti completion The value of materials
nished but not certified was 4,000.
prufit to dzte 2ssuing dereiztia jat
Prepare an account in respect of the contract showing
pruft the company wud be justift in anz
st 10 per cent per annum and state the propurtion of
o credit of the Profit and Loss Account. 2s mre than one half wrt as
Ans. Total profit 18,600; Profit taken to P. &L Ae9.920
certiñed
undertakes larze contracte. On 31st March on 2015 tea
Gujarat Engineering Company Limited Ened l t y
16 The the position of abridge contract which w2s
aDual acoOunts were prepared,
2014 was as follows : Plartdespatted
7,0,000: Sundry erpenses 730,000:
Materials purchased 6,00,000; Wages paid10,000, Materials in hand 7 24/000. The vae of wrt
accrued
10 site (cost) 1,00,000; Wages wort fnished but ertifed
certifed was7 14,40,000 of which 7 10,80.000 has been received The valued a000. The
valued at 40,000. The plant on the site on 31s Mard 2015 was the estiates
wE oost ofthe wort todate was wthin reasrabiy bE ranered
cOntract price was 24.00.000 and the wtich shoald
Iou are required to prepare Contract AcoTunt showing the prfitand to shos bOw the paticulas relating
Account, to calculate Work-in-Progress
Proit and LoSs 2013
o the
should appear in the Balance Shet of the ompany as at 31st Mart 1408000
o the contract
144.000: Profit transferred to P& L Ac 72,000, Balance oWIP ?
Ans. Total Profit commenced on lst Max
Engineering Ltd. undertook contracts. The Contract No. 501, =hict was
3. The under as on 31st March 2015 utstandng
ZU14, appeared in the ledger as on hand 75.000: Wages paid 21.87 50 Wages
Materials 18,75.000: Materials Plant 3.12500
of Indiret Expenses 7 93,750:Cost of
31,250; Proportionate share
45.00.000 of been recerved Work coanpleced
wtich 33.75,000 had75,00.000
Ihe value of work certified was
1.25.000. The Contract Price was
at unoertified was valued at March 2015
valued at 2.50,000 on 3lst
* Piant on site was
No. 501 afer taking credit for pruit which you coGAder reasccable
Tepare Contract Account
for P. &L Wc 2.25,000
Total Profit 450.000: Profit taken aoatract ledger separa te
aconurt for eac
. Afirn of out large ontrats keptincntract carried out during the year ended
Builders, carry1ngparticulars relate to a errain
tract. The following
Blet March, 2015 received froo the contracee 390,000, Materials seat
Work certifed by architects ? 4.29,000: CashZl64.400 Plant installed on site 33.900: Value of Plant
to ite 193.500, Labour engaged on site
10,200, Establishment charges 79,750; Direct
work not yet Gertibed 5,400, Materials in hand at 31-3-2015 4200
at31-3-2015 24.,600; Cost ofaccrued
expenditure 7,200; Wages 1,200; atDirect 31-3-2015 7
expenditure aocrued ddue at 31-3-20 15 600, Coctract
Materialsreturned
price 6.00.000.
to store
Xou are account shoing the profit on the contract on 31st
March, 2015.
required
Ans. Total prepare an
Proft to 54,450; Profit taken to Proitt and Loss Actount 33,000.
366 SAHITYA BHAWAN PUBLICATIONS
21. Athrm of Builders carrying out large contracts keeps separate account for each contract n its contra
ledger. On 31st March, 2015., following informations are given in respect of Contract No. 555
Materials Purchased
Materials issued from stores
120,2),0904
Plant which has been used on other contracts
Additional Plant
25/99
Wages
Direct Expenses
1,47,5,090
000
Proportionate Establishment charges 18,000
6,00,000 and the money certifed
1he contract which had commenced on lst November. 2014 was for The naterials on site were
2,40,000.
Dy the architect, after deduction of 20% retention money was deprecation were
(20,000. Acontract plant ledger was also kept in which monthly entries relating to
entered, the amount of depreciation debited in res pect of contract No. 555 upto 31st March, 2015
was 2,500. Prepare an account showing profit on contract.
Ans. Total Profit 7,500: Profit taken to P &LAlc 4,000.
contract age, only depreciation
Hint. Inthe solution of this question, cost of plant free not be shownisinkept
will be shown in Debit side of the ale be cause plant ledger separately.
Z2 rom the following information, prepare a Contract Account for the year 2014-15:
Contract Price 5,00,000: Materials Purchased 80,000: Materials issued from store 70,000:
being
Payment to Labour 30,000:; Direct expenses 40,000: Indirect expenses 5,000; Cost received
store 4,000
certified 2,00,000: Work uncertified 40,000; Materials returned to
d07% of work
Materials at site 3,000; Outstanding wages 5.000; Materials destroyed by fire 4,000.
issued to
The construction of building was started on 1st April, 2014. Plant costing 40,000 was
plant costing 2,000 was transferred to other contract.
Contract on lst June, 2014. On 30-11-2014.
Plant costing 1,000 was lost by theft and of 500 was destroyed by fire. Plant costing? 2,000 was
sold for 2,200. Depreciation of plant is charged each year @10%% p.a.
Ans.Total Profit 68,025: Profit to P&L Alc 36.280: Tbtal of Contract Account 3,38,225.
23. From the following data prepare Contract Account on 31st March, 2015 :
Materials 60,000
Labour 50,000
Plant 40,000
Salary to Supervisory Staff 5,500
Work certified 1,25,000
Work uncertified 5,000
Cash received from Contractee 1,00,000
You are further informed that :
(a) The work on the contract commenced on lst October, 2014.
(b) The value of contract is 2,00,000.
(c) The wages of the workers for one weak and the salary of the supervisory staff for one month
were due to the end of the period.
(d) The Company writes off depreciation @10% per annum on its plans.
(e) The value of materials at site on 31st March, 2015 was 2,500.
Ans. Total Profit 11,900;Profit to P&LAlc 6,347; Profit to Work-in-Progress 5,553.
24. Acompany undertook a contract for construction of a large building complex. The construction work
commenced on lst April, 2014 and the following data are available for the year ended 3lst March,
2015 :
Contract Price 35,000; Work certified ? 20,000; Progress Payments Received 15,000; Materials
Issued to Site 7,500; Planning & Estimating Costs 1,000;Direct Wages Paid 4,000; Materials
returns from Site 250; Plant Hire Charges 1,750; Wage related Costs 500;.Site Office Costs
F678;Head Ofice Expenses Apportioned 375; Direct Expenses incurred 902; Work not certiied
7149.
The contractors own aplant which originally cost 2,000 has been continuously in use in this contract
throughout the year. The residual value of the plant after 5years of life is expected to be 500.
Straight line method of depreciation is in use.
 367
ONTRACT OSTING
Marh. 15 the diret wages due and pavable amounted to 270 andthe materials at
at 00 You are
ontract At for the year required to
caleulation ended $1st NMarch, 2015.
of proñt to be taken
relerant to P &LAc of the year.
the Balance Sheet
Proft 3,24: Proft toentries
Pêl Ac 1.662: 18,487.
Determination of Cost of Work Work-in-progss
s
Uncertified
Kshre and Company ommenced the work on aparticular contract on lst July, 2014. They
s of awunts for the vear on 31st March each year. The following information is
mtheir costing reords on 31st
March, 2015: 50,000
slaTForman 12,000
1,00,000
4zaine stng 32.000 in use on site for l5 of the year. Its working life was estimated at
srAp aue at remained
2.000. Asuperisor is paid 2,000 per month and had devoted one-half of
ntract. Al other expenses were 15.000. The materials on site were was 9,000.
prie was4.00,000. On 3lst March. 2015. 23 of the contractt was completed however,
archite gare Certifcate only for 2.00,000 on which 75% was paid.
the Contract. Account.
orkunertiied 4.550: Total Proñt 66.350: Proft to P&L IAle 33,175. July, 2014.
ioractor makes up his acoounts on 3lst March. Contract No. 100 commenced on lst
sting eords show the following information on 3lst March, 2015: 42,000
Mataria Issued 1.02,000
12,500
Orber chaerges 25,500
4stration expenses 4,400
Matarialsin hand estimated at six
months. Its workingg life is
4-achine costing 36,000 had been on the site for six spent
whois paid 21,600 per annum has
LSand itsinal scrap value at 6,000. Asupervisorprice was 4.00.000 and on 31st March, 2015, 2/3
Tehalf of his time at the contract. The contract issued covering 2,00,000. Cash
certificate had been
fthe corntract was completed. Architect Contract Account.
HEved was 80% of work certified. Prepare
58,850; Profit to P &LAe 31,387.
Áns, Cost of Work Uncertified 47,050; Total Profit issued, labour
Account stands debited with the cost of materials
2 A the end of the year, a Contract issued and it standscredited with materials at site 2,000 and
2doverbeads expended and plant after charging depreciation at 20%. The net cost of contract is
ant at site revalued at 8,000, overheads debited to the Contract Account are in the ratio of
30.000. The materials, labour and of the contractee's
the contract has been certified by work
3:2:1. The contract price is 50,000. 45th value has
as completed, a month before the end of the year and 80% of the certifiedcredited to proit
rcitect informs that 23rd of the profit on cash basis
been received in cash. The accountant8,000.
and loss account of the contract is the year 2014-15 showing the cost of
work done but
Prepare in full. the Contract Account for the above information.
Dertifed,and the work-in-progress from 40,000.
&LA/e 8,000; Work certified
Ans. Work uncertified 5.000: Profit to P the year ending31st March, 2015:
contractor for
ofa
Ie following figures are taken frorn the books
5,00,000
Work-in-Progress on 3lst March, 2014 3,00,000 2,00,000
Advances from Contractees
Iransactions during the year : 40,000
SMaterials supplied to contract direct : 90,000
Materials issued from store 20,000
hisown stock
atenals supplied by contractee from 70,000
Wages
Direct expenses
10,000
4,000
Administration expenses 22,000
Plant issued
368 SAHITYA BHAWAN PUBLICATIONS

Materials returned to store

Materials returned directly to suppliers
Contracts finished
Work certified
Profit taken on contracts
2,20,645
Advances from Contractees 130,599
Prepare the Contract Ledger Account and the Total Contractees Account and show 5,h00,00
work-in-progress would appear in the Balance Sheet as on 31st March, 2015.
Ans. Work uncertified ? 4,74,000;Work-in-Progress for Balance Sheet 54,000.
Hint. Materials supplied by contracte from his own stock will not be shown in contract account
because it will not effect the cost of contract for contractor.
Incomplete ContractsShowing Loss
29. The folowing is asummary of the expenditure on Contract No. 375 to 31st March, 2015:
Direct Wages
Direct Material 13,309
Stores issued 68,000
`tores returned 7,600
Sub-contract costs 1.100
Plant 12,600
You obtain the following information : 24,000
(i) The contract was begun in 2014-15 and the contract price was 1,20,000. The architects hod
certified that 4/5th of the contract had been completed on 15th March, 2015.
(i) Depreciation of plant to 15th March, 2015 is 9,600.
(iii) The summary set out above includes items relating to the period since cerification (15-3-2015
as follows: Wages 1,400and Materials used3,240.
(iv) Materials on site on 31st March, 2015 had cost 10,000 and stores on site had cost 800.
(v)Establishment charges are 40% on direct wages.
(vi)Afine of 5,000 is likely to be imposed for the late completion of the contract.
You are required (a) to prepare Contract No. 375 Account, (b) to show clearly and separately what
profit or loss has arisen on the work certified and (c) to suggest what amount should be taken to the
Profit and Loss Account for the year ending 31st March, 20 15.
Ans. Loss transferred to P & L Alc 4,020.
30. Building Construction Ltd. undertook acontract for *1,00,000. The following expenses were incurred
regarding this contract during the year 2014-15 :
Material sent to site 31.000
Direct wages paid 28,000
Chargeable expenses 6,000
Plant installed 10,000
General expenses 9.000
Establishment charges 7,000
The architects of contractees certifiedthe work of 60,000at the end of the year. The cost of work
uncertified was ? 5,000 on that date. The materials and plant were at site of 3,000 and 6,000
respectively at the end of the year.
Prepare (i) Contract Account, (i) and also show how these transactions will appear in the Balance
Sheet of the contractor at the end of the year.
Ans. Loss to P&L Alc 17,000.
31. Acontractor made the following payments on account of acontact during the year 2014-15
Material 8,00,000
Plant 4,00,000
8,00,000
Wages 1,50.000
Overhead
At the end of the year, the liabilities of the contractor were 30,000 on account of Overhead;? 5U,00
on account of Material and 15,000 on account of Wages. Unused materials valued at 50,000
the mid year, a plant of ? 15,000 (cost) was lost due to fire. The contractor received 14, 500 T
Insurance Company against the claim of? 15,000. Work certified (65% of contract) was 18,00,00
 And
uncertified
work valued at RCONTRACT COSTING 369
Account.
20,000.
Ans.
Loss 23,125:
Loss on Plant Lost ? Depreciation on Plant is 12. 6% p.a. Prepare Contract
A
building
contractor who takes big 500:; Plant at Site
expenditure on 30th
Sept., 2014 in contracts, his account 3,36,875
18,000: purchased ? connection with
Cement & Rrickes honks ahow the following iterns of
chased Wooden Doors 87,250; Contract 151
No.
Mate rials isRued
expenses74,050: Wi ndows from store 14,700: Iron, Steel etc.pur-
The
contract was Supervision charges 13,050.
etc.
purchased ? 25,000;
commenced on 1st April, 2014. Its price
Labour 1,11,900; Sundry
work bythe engineer, after
on 30th
Sept. deductionat 25% retention money was
2014. The materials was
6,00,000. The amount of certified
the work being certified
hire. wAs used on contract site on 30th Sept., 4 was2,00,000.
per
monthis
already throughout
included in
the six months. Its
sundry charges while three
2014
hire
worth
charges for
3,000. Aplant taken on
three months @ 1,000
value of the plant is of ?
Youare required to prepare
50,000. months'hire charges is stillowing. Book
from the above
A) Contract Account; (b)
Work-in--Progress in BaalanceWork-in-Progress
particulars (c)
Accounts; Contractee's Account: (D) also show the
sheet as on 30.9.2014.
Ans, 7.283 (Loss): WIP in B/ST 66,667.
Plant is taken on hire
so plant's value will not be shown in contract
account.
Reserve for Contingencies
S. Acontractor took up a contract on lst April, 2014. The following were the expenses incurred on the
t:
contract
Material sent to site 50,000
Plant 11,000
Salaries 2,000
Wages 6,000
Other Expenses 2,000
Cash received 64,000 was 80% of workcertified. As on 31-3-2015, the cost of uncertified work was
1L000, the costs of plant and materials destroyed by fire were 1,000 and 10,000 respectively
and the wages unpaid were 3,000. Plant is to be written-off @
10%. One-third of proit received is
to be reserved for contingencies.
Prepare Contract Alc and show how work-in-progress would appear in Balance Sheet.
Ans. Total Profit 27,000; Profit to P. & L. Alc 14,400: Reserve for contingency 7,200; General
Reserve ? 5,400; Work-in-progress 68,400.
was the expenditure
4. firnm of building contractors began to trade on 1st April, 2014. The following
A
on thecontract for 3,00,000: 51,000
Materials issued to contract 15,000
Plant used for contract 81,000
Wages incurred 5,000
Other expenses incurred the work certified.
2015 amounted to 1,28,000 being 80% of
Cash received on account to 31st March, which cost
plant which cost 3,000 and materialscost of work
materials charged to the contract,
Of the plant and plant which cost 2,000was returnedon to stroes, the
were lost. On 31st March, 2015 site.
2,500
was 1,000 and materials costing 2,300 were in hand from
one but uncertified
reserve 1/3 profit received and prepare a Contract Account
Charge 15% depreciation on plant,
the above particulars. P&L Ae 14,400;Reserve7,200
27.000:Profit to expenses
Ans, Total Profit on lst April, 2014 and incurred the following
35. M/s Ankur Bros. took a contract for 5,00,000
thereon upto 31st March, 2015: 60,000
40,000
Materials purchased 30,000
Materials issued from store
65,000
Plant sent to site
10,000
Wages
Wages outstanding
5,000
Ofice expenses