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X Ltd. is Engaged in Two Contracts, a and B During the Year .The Following Information is Available at 31st Dec. 2017. - Cost Accounting(Financial Accounting and Auditing 10)

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.

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Solution

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
Concept: Contract Account
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