Question

Deepankar Engineers undertook a contract of building construction which commenced on 1/4/2017. The following details are available for the year ending
3113/2018.
You are required to prepare :
(a) Contract Account for the year ending 31/3/2018, and
(b) Balance-sheet extract as on that date.

Particulars	(Rs.)	Particulars	(Rs.)
Contract price	3,50,000	Direct Wages Paid	40,000
Work certified	1,7,500	Material Returned From site	2,500
Cash received	1,20,000	Plant hire charges	17,500
Materials issued to site	42,000	Indirect Wages	5,000
Planning and Estimating Cost	10,000	Site Office Costs	6,780
Direct Expenses	9,020	Head Office Exps. apportioned	3,750
Work not Certified	1,490

The contractor's own plant, original cost Rs. 20,000, has been continuously in use for this contract throughout the year. The residual value of the plant after 5 years of life is expected to be Rs. 5,000. Straight line method of depreciation is in use. As on 31/03/2018, outstanding wages amounted to Rs. 27,000 and material at site was estimated at Rs. 20,000.

Answer 1

Dr.

Books of Deepankar Engineers' Contract Alc (For the Year Ended 31-3-2018)

Cr.

Particulars	(Rs.)	Particulars	(Rs.)
To Material Issued to Site	42,000	By Work Certified	1,71,500
To Planning & Establishment Cost	10,000	By Work not Certified	1,490
T o Direct Expenses	9,020	By Material Returned from Site	2,500
To Direct Wages Paid	40,000	By Plant at Site	5,000
To Plant Hire Charges	17,500	By Work not Certified	20,000
To Indirect Wages	5,000
To Site Office Costs	6,780
To Head Office Expenses Apportioned	3,750
To Plant	20,000
To Outstanding Wages	27,000
To Notional Profit c/d	19,440
	2,00,490		2,00,490
To Profit and Loss Alc - (Profit)	9,049	By Notional Profit b/d	19,440
To Stock Reserve	10,391
	19,440		19,440

Extracts· of Balance Sheet
(For the Year Ended 31-3-2018)

Liabilities	(Rs.)	Assets		(Rs.)
Profit and Loss Alc	9,049	Material at Site		20,000
Outstanding Wages	27,000	Plant at Site		5,000
		Work-in-Progress :
		Work Certified	1,71,500
		(+)Work Uncertified	1,490
			1,72,990
		(-) Cash Received	1,20,000
			52,990
		(-) Stock Reserve	10,372	42,618

Working Note:
Contract Price=Rs. 3,50,000
Work Certified=Rs. 1,71,500
i.e. More 50%, but less than 90%
`therefore 2/3xx"National profit"xx"Cash Received"/"Work Certified"`

`=2/3xx19400xx120000/171500`

`=2/3xx13574`

= Rs. 9,049 P and L A/c (Profit)

and Rs. 10,391 Stock Reserve [Rs 19,440 - Rs. 9,049]