Question

X Ltd. is engaged in two contracts, A and B during the year .
The following information is available at 31st Dec. 2017.

Date of Commencement	Contract - A (Rs.)	Contract - B (Rs.)
Contract Price	6,00,000	5,00,000
Materials delivered to site	1,20,000	50,000
Material issued from store	40,000	10,000
Material returned to store	4,000	2,000
Material on site 31st Dec. 2017	22,000	8,000
Direct labour payments	1,40,000	35,000
Direct expenses	60,000	30,000
Architect's fees	2,000	1,000
Establishment charges	25,000	7,000
Plant installed at cost	80,000	70,000
Value of Plant on 31st Dec. 2017	65,000	64,000
Accrued wages 31st Dec. 2017	10,000	7,000
Accrued expenses 31st Dec: 2017	6,000	5,000
Cost of contract not certified by architect	23,000	10,000
Value of contract certified by architect	4,20,000	1,35,000
Cash received	3,78,000	1,25,000

During the period, materials amounting to Rs. 9,000 have been transferred from Contract A to Contract B. You are required to show :
(a) Contract Alc,
(b) Contractee 's Alc, and
(c) Extract from Balance Sheet as on 31st Dec. 2017 showing the calculation of WIP.

Answer 1

Books of X Ltd.

Dr.

Contract Alc (for the year ended 31-12-2017)

Cr.

Particulars	Contract - A (Rs.)	Contract - B (Rs.)	Particulars	Contract - A (Rs.)	Contract - B (Rs.)
To Materials Delivered to Site	1,20,000	50,000	By Materials Returned	4,000	2,000
To Materials Issued from Store	40,000	10,000	By Materials on site (31 -12-2017)	22,000	8,000
To Direct Labour payments	1,40,000	35,000	By Work-in-Proeress :
To Direct Expenses	60,000	30,000	Work Certified	4,20,000	1,35,oo0
To Architect's Fees	2,000	1,000	Work Uncertified	23,000	10,000
To Establishment Charges	25,000	7,000	By Materials Transferred to Contract -B	9,000
To Accrued Wages	10,000	7,000
To Accrued Expenses	6,000	5,000
To Material From Contract-A	-	9,000
To Notional Profit c/d	75,000	1,000
	4,78,000	1,55,000		4,78,000	1,55,000
To Profit and Loss A/c	45,000	308	By Notional Profit b/d	75,000	1,000
To Reserve A/c	30,000	692
	75,000	1,000		75,000	1,000

Dr.

Contractee's Alc

Cr.

Particulars	Contract - A (Rs.)	Contract - B (Rs.)	Particulars	Contract - A (Rs.)	Contract - B (Rs.)
To Bal. c/d	3,78,000	1,25,000	By Bank Alc	3,78,000	1,25,000
	3,78,000	1,25,000		3,78,000	1,25,000

Balance Sheet (Extracts Only)
(For the Year Ended 31-12-2017)

Asset		(Rs.)	(Rs.)
Plant at Site (80,000 + 70,000)		1,50,000
(-)Depreciation (15,000 + 6,000)		21,000	1,29,000
Material at Site :
Contract-A		22,000
Contract-B		8,000	30,000
Work in Progress:	contract -A	Contract-B
Work Certified	4,20,000	1,35,000
Work Uncertified	23,000	10,000
	4,43,000	1,45,000
Less : Reserve	30,000	308
	4,13,000	1,44,692
Less: Cash Received	3,78,000	1,25,000
	35,000	19,692	54,692