U Limited are engaged in a number of long-term contracts. The following details relate to the three

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Question:

U Limited are engaged in a number of long-term contracts. The following details relate to the three uncompleted contracts in the company’s books at 31 August 2017

Contract No.
X012 Sh.’000’
X022 Sh.’000’
X023 Sh.’000’

Cost of work to 31st Aug. 2017
1,218
1,091
545.6

Cost of work to 31st Aug. 2017
Value of work 31 Aug. 2017 as certified by contract architects
1,540
880
572

Progress payments invoice to 31 Aug. 2017
1,320
704
440

Process payment received by 31 Aug. 2017
1100

440

Final cost including future costs of rectification and guarantee work
1320
1540
2,640

Final contract price
1,672
1,232
3,520

Note 1: The cost of work to 31 Aug. 2003 has been determined after crediting unused materials and written down for plant of use.
Required:
(a) Prepare a statement for the managing director showing your calculations for each contract of valuation of W.I.P at 31 Aug. 2003 and of profit or loss included therein (use % of completion)
(b) Show as an extract the information which should appear in the balance sheet for the work in progress.