On 1st January, A undertook a contract for Rs 5,00,000. He incurred the following expenses during the
Question:
On 1st January, A undertook a contract for Rs 5,00,000. He incurred the following expenses during the year:
Rs Materials issued from stores 50,000 Material purchased for the contract 45,000 Plant installed at cost 35,000 Wages paid 1,00,000 Wages occurred due on 31st December 40,000 Direct expenses paid 10,000 Direct expenses accrued due on 31st December 2,500 Establishment 6,500 Of the plant and materials charged to the contract, the plant which cost Rs 2,000 and the materials costing Rs 1,500 were lost. Some of the materials costing Rs 2,000 were sold for Rs 2,500. On 31st December, the plant, which cost Rs 500, was returned to the stores, and a part of the plant, which cost Rs 200, was damaged, rendering itself useless.
The work certified was Rs 2,40,000 and 80% of the same was received in cash. The cost of work done, but uncertified was Rs 1,000. Charge 10% p.a. depreciation on plant and prepare the Contract Account for the year ended 31st December, by transferring to the profit and loss account the portion of the profit, if any, which you think is reasonable. Show also the particulars relating to the contract in the balance sheet of the contractor as on 31st December.
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