A company undertook a contract for construction of a large building complex. The construction work commenced on 1st April 1997 and the following data are available for the year ended 31st March 1998.

	Rs '000		Rs '000
Contract price	35,000	Plant hire charges	1,750
Work certified	20,000	Wages related costs	500
Progress payments received	15,000	Site office costs	678
Materials issued to site	7,500	Head office expenses apportioned	375
Planning & estimating costs	1,000	Direct expenses incurred	902
Direct wages paid	4,000	Work not certified	149
Materials returned from site	250

The contracts own a plant, which originally cost Rs 20,00,000, has been continuously in use in this contract throughout the year. The residual value of the plant after 5 years of life is expected to be Rs 5,00,000. Straight-line method of depreciation is in use.

As on 31st March 1998, the direct wages due and payable amounted to Rs 2,70,000 and the materials at site were estimated at Rs 2,00,000.

Required:

1. Prepare the contract account for the year ended 31st March 1998.
2. Show the calculation of profit to be taken to the profit and loss account of the year.
3. Show the relevant balance sheet entries.

Answer rating: 100% (QA)

Dr Particulars To Material issued to site To Direct wages paid To Wages outstanding To wages related ... View the full answer